Australian, New Zealand Dollars Hit Post-COVID Lows Against Euro Amid Ukraine Ceasefire Talks
Singapore, March 12 (Reuters): The Australian dollar (AUD) and New Zealand dollar (NZD) slid to their lowest levels against the euro since the COVID-19 pandemic, as Ukraine agreed to a U.S.-proposed ceasefire, potentially marking a step toward peace.
The euro surged to A$1.7418, its highest level since April 2020, and NZ$1.9167, the strongest since March 2020.
Euro Strength Amid Ceasefire Developments
The euro gained broadly after the U.S. announced it would restore military aid and intelligence sharing to Kyiv. Following this, Ukraine accepted the U.S. ceasefire proposal, but Russia has yet to respond, leaving the situation uncertain.
AUD and NZD Trading Sideways Against the U.S. Dollar
Despite their losses against the euro, the Australian and New Zealand dollars have remained range-bound against the U.S. dollar. Market sentiment is caught between risk aversion, triggered by U.S. stock market declines, and a weaker U.S. dollar due to concerns over a slowing American economy.
• The New Zealand dollar (NZD) hovered around $0.57 on Wednesday.
• The Australian dollar (AUD) traded just below $0.63.
Analyst Views: Will the Aussie Find Support?
Strategists at Westpac believe falling U.S. yields and the lack of support for the U.S. dollar could prevent further declines in the Australian dollar.
“Beyond the short-term headlines, we see a more constructive multi-week backdrop developing for AUD,” said Richard Franulovich, Head of Foreign Exchange Strategy at Westpac.
He pointed out that U.S. policy uncertainty remains high, affecting market confidence. Additionally, AUD-USD yield spreads are slowly shifting in favor of the Aussie, keeping the currency in a mild uptrend despite recent volatility.
Market Outlook
While short-term fluctuations are driven by geopolitical headlines, analysts suggest a potential medium-term recovery for the Aussie if U.S. policy instability persists and yield differentials remain favorable.
