EUR/USD slumps to new two-month low amidst significant US dollar demand
Philip McHugh June 21st 2021 - 2 minute read
The US dollar remained well supported on Friday, with the currency continuing to catch bids in light of the Federal Reserve’s recent hawkish shift.
Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1634 and GBP/USD stable at $1.3807. GBP/CAD is rangebound at C$1.7226, while GBP/AUD and GBP/NZD hold steady at AU$1.8443 and NZ$1.9854 respectively.
Coming up, EUR investors will look to European Central Bank (ECB) President Christine Lagarde for fresh impetus today.
What’s been happening?
The US dollar maintained its bullish momentum through the second half of last week, leaving the currency to close the session on a high.
The continued uptrend in USD exchange rates was largely attributed to the Fed’s hawkish turn following its June policy meeting, but was also reinforced by a prevailing risk-off mood.
As a result of the strong demand for the US dollar, the euro found itself on the back foot though Friday’s trading session, with the negative correlation between the pairing exerting some notable pressure on the single currency.
The pound, meanwhile, faltered at the end of last week’s session, with some initial pressure coming on the back of the UK’s latest retail sales figures, which reported a disappointing contraction of sales growth last month.
Further undermining Sterling sentiment were ongoing Brexit concerns, with the UK and EU still at odds over the Northern Ireland protocol.
What’s coming up?
In the spotlight at the start of this week’s session we have ECB President Christine Lagarde’s testimony before the European Parliament Economic and Monetary Affairs Committee.
EUR investors will be looking for any fresh hints regarding the ECB’s future plans for monetary policy, but may be left disappointed if Lagarde maintains the bank’s cautious outlook.
A speech by Federal Reserve policymaker John Williams will be the primary focus for USD investors today and could propel the US dollar higher again if he reinforces the Fed’s current hawkish bias.
Meanwhile, in the absence of any notable UK data releases, the pound may remain on the back foot, with today marking the government’s original date for lifting the final coronavirus restrictions.