Over the coming week, the Euro to US Dollar (EUR/USD) exchange rate is likely to be subject to intense volatility due to several important domestic data publications with the potential to ignite changes.
In particular, the Eurozone Gross Domestic Product, European Central Bank interest rate decision, the US Change in Non-farm Payrolls and Unemployment Rate will be of significance for the EUR/USD currency pair.
EUR/USD Forecast to Strengthen on Monday
Although European data printed relatively negatively on Monday, the Euro to US Dollar (EUR/USD) exchange rate is trending within a narrow range. This can be attributed to traders speculating that US data, due for publication later on Monday afternoon, will print disappointingly.
The Euro to US Dollar exchange rate is currently trending in the region of 1.2454.
Monday’s European data has been less-than-ideal, causing the common currency to decline against the majority of its most traded rivals. German Manufacturing was particularly disappointing having dropped below the 50 level which separates growth from contraction.
The US Dollar, meanwhile, is likely to gradually soften against its major peers as traders await the ISM Manufacturing data, which is forecast to tick lower from 59 to 58.
Euro to US Dollar Exchange Rate Could Soften on Tuesday
With a lack of influential European data on Tuesday, Euro movement will be dictated by changes in foreign currencies. The Eurozone Producer Price Index will have minimal impact on single currency movement.
The US Dollar is likely to strengthen on Tuesday if domestic data meets with expectations. Construction Spending is forecast to increase from -0.4% to 0.6%. ISM New York data may also be of interest to US Dollar traders.
EUR/USD to Fluctuate on Wednesday
There will be several important economic data publications pertaining to both Europe and the United States on Wednesday. Of particular significance will be the Eurozone Gross Domestic Product and the US Non-Manufacturing Composite.
The single currency is likely to soften on Wednesday morning as traders await the Eurozone GDP. Euro movement will be subject to the rate of growth. Eurozone Retail Sales will also be of interest to those invested in the Euro.
The US Dollar is likely to soften ahead of the Non-Manufacturing Composite which is forecast to decline from 57.1 to 56.8. Should the data meet with expectations the US Dollar could potentially advance against the Euro.
Thursday Could See the EUR/USD Currency Pair Decline
With the European Central bank due to make their interest rate decision on Thursday, the common currency is likely to soften. This is because the ECB has been threatening stimulus for a long while, and they are far more likely to be dovish than hawkish. The German Construction PMI, Eurozone Retail PMI and German Retail PMI also have the potential to spark volatility.
In terms of US data, Continuing Claims and Initial Jobless Claims will be of most significance to US Dollar traders.
Euro to US Dollar Exchange Rate to Trend Lower on Friday?
Although US Dollar volatility is highly likely on Friday, if the labour market data meets with forecasts the US Dollar will strengthen. Change in Non-farm Payrolls is forecast to increase from 214,000 to 215,000. Unemployment Rate is expected to show a positive declination from 5.8% to 5.7%.
Average Hourly Earnings, Average Weekly Hours all Employees, Change in Household Employment, Change in Private Payrolls, Labour Force Participation Rate, Trade Balance, Two-Month Payroll Net Revision, Underemployment Rate, Factory Orders and Consumer Credit will all be significant for those invested in the US Dollar.
In terms of European data, German Factory Orders is the only economic data publication on Friday.
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.2467 at the close of last week.
EUR/USD Exchange Rate Forecast to Remain Under Pressure
The Euro to US Dollar exchange rate is forecast to remain under pressure over the coming week as economist expectations for the European Central Bank (ECB) to introduce quantitative easing remain high after Friday’s poor inflation data.
With a number of PMI reports due for both the USA and Eurozone next week the currency pair is likely to experience volatility. Of particular interest to economists will be Thursday’s US second ADP and Non-Farm payrolls data.
