Euro Exchange Rates Well Bid Today + Outlook for the Euro Turns Firmer in Short to Medium Term

The Euro is one of the clear leaders on the global forex markets today:

• The Euro Dollar exchange rate is 0.23 pct higher on a day-to-day basis at 1.3552.
• The Euro Pound exchange rate is 0.73 pct higher at 0.8436 after UK retail sales dealt a blow to Sterling bulls.
• The Euro Australian Dollar exchange rate is 0.38 pct higher at 1.4260.

[Keep in Mind: The above quotes are taken from the wholesale markets, your bank will subtract their own spread when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.]

Outlook for the Euro increasingly bullish

Emmanuel Ng at OCBC Bank says the outlook for the Euro is turning firmer in the short to medium term:

"The EUR-USD may look increasingly constructive towards the upside into the end of the week given the Fed’s inaction, although the upcoming weekend German elections may prove to be damper.

"Expect consolidative behaviour in the near term with perhaps a locus to be expected around the 1.3470 region pending further cues."

What does the Fed decision mean for currency markets?

Geoffrey Yu at UBS thinks yesterday's FOMC meeting has the following implications for currency markets:

"The Fed's shift has thrown the whole timetable for tapering and ending quantitative easing into doubt. The market reaction against the greenback has been swift and we expect over the next one to two weeks, longer-term asset managers will keep paring back dollar longs.

"This suggests EURUSD and GBPUSD can re-test their highs for the year of 1.37 and 1.64 respectively while USDJPY stays heavy in its current 96-100 range.

"Stocks, gold, commodity currencies and emerging markets should continue to similarly benefit until the end of September from the Fed's shift to keeping policy looser for longer."

No recovery for the Dollar

Yu believes that yesterday's FOMC outcome will keep the dollar weak until the end of the year.

"Dollar downside may be limited by risk-aversion in October owing to US fiscal risks and by other central banks responding by either cutting interest rates – the European Central Bank or the Reserve Bank of Australia for example – or talking dovishly to stop their currencies rising against the dollar. But only when the Fed feels more confident to start tapering will the dollar start to recover in the new year," says Yu.