GBP/EUR: Brexit Speculation Sends Pound To 4 Month High vs Euro
  • Euro (EUR) extends declines ahead of the ECB meeting tomorrow
  • ECB are expected to adopt a more dovish stance
  • US Dollar (USD) rises as safe have flows pick up after US tech sell off continues
  • AstraZeneca halts vaccine trials

The Euro US Dollar (EUR/USD) is trading mildly lower for yet another session. The pair settled on Tuesday -0.3% at US$1.1779. At 08:15 UTC, EUR/USD trades -0.04% at US$1.1772, as the pair picks up from  4 week low of US$1.1760.

The Euro is trading on the back foot as investors look ahead to what is expected to be a dovish European Central Bank meeting tomorrow.

The European Central Bank’s Chief Economist Philip Lane has already raised the Euro’s strength as a concern. His comments came after the Euro rallied to a 2 year top against the US Dollar. Analysts broadly believe that the ECB President Christine Lagarde will add to these comments by Philip Lane, highlighting the appreciation of the common currency over recent months. The ECB is unlikely to take policy action based on Euro strength. However, they are expected to try to talk down the value of the Euro.

No changes to policy are expected. Although more dovish comments are expected, particularly after the Fed’s dovish meeting.

The safe haven US Dollar is pushing higher amid risk off trading.  Another deep sell off in US tech stocks overnight spread to the wider equities market creating a risk adverse climate. Demand for the safe haven greenback rose.

Adding to the risk off sentiment was news that AstraZeneca will pause all its coronavirus vaccine trials as a participant in the latest trial appeared to experience adverse side effects. It is standard procedure to halt vaccine trials under such circumstances for independent review. However, the markets are extremely sensitive to vaccine news given that it is the surest and quickest route to return to pre-covid levels of economic growth.

There is no high impacting US data due today meaning that sentiment will drive the US Dollar.