The Euro to US Dollar (EUR/USD) exchange rate held firm on Wednesday, with the pairing experiencing very minimal movement. This is likely a result of traders holding off investment in the US Dollar ahead of the Federal Reserve interest rate decision later on Wednesday evening. A lack of major local data has kept the common currency from experiencing volatility, although mixed data from France and Spain has caused a slight Euro declination against some of its major peers.
The Euro to US Dollar exchange rate is currently trending in the region of 1.2736.
Over the past month or so the Euro has struggled to sustain any clear advances under the heavy weight of negative sentiment towards the European Central Bank. As the ECB continues to employ radical stimulus measures in the hope of shoring up the flagging Eurozone economy, the general consensus is that President Mario Draghi is struggling to stay in control. The most recent covered bond purchase is yet more cannon fodder for anti-ECB and anti-Draghi traders.
Although sentiment towards the Federal Reserve hasn’t plunged to the depths of the ECB, a recent string of disappointing US data results has caused futures traders to pare bets as to the timing of tighter monetary policy.
Tuesday’s US data was particularly discouraging for rate hawks. Durable Goods Orders were forecast to increase from a decline of -18.3% to growth of 0.5%, but the actual result showed contraction of -1.3%.
The Euro to US Dollar exchange rate has fallen to a low today of 1.2721.
On Wednesday, the common currency held firm against many of its currency rivals. This is as a result of mixed data results from France and Spain. French Consumer Confidence equalled the previous figure of 85, although the median market forecast was for a rise to 85.95. Monthly Spanish Retail Sales declined beyond the market consensus of a drop from 2.5% to -0.05%, with the actual data falling to -1.8%. Yearly Retail Sales, however, eclipsed the forecast figure of 0.55%, with the actual result jumping from 0.3% to 1.1%.
With the Federal Reserve due to make their monetary policy decision on Wednesday evening, the US Dollar is generally unmoved against most of its major peers. Although most economists agree that the Fed is very likely to end the long period of quantitative easing, the poor data on Tuesday has cast doubts on how hawkish the American central bank will be.
Euro to US Dollar Exchange Rate Forecast to Strengthen
With so many central banks disappointing rate hawks over the past month, it is unlikely that the Federal Reserve are going to make any particularly hawkish moves towards monetary policy normalisation. Should this be the case, the EUR/USD exchange rate is likely to strengthen.
The Euro to US Dollar exchange rate has advanced to a high today of 1.2747.
UPDATE
The Euro to US Dollar exchange rate is currently trending in the region of 1.2580.
German labour market data printed very positively on Thursday, although this has been mutely received by traders as they hedge bets ahead of German inflation data. The common currency has softened against the majority of its most traded currency peers.
The Federal Open Market Committee meeting to decide on the benchmark interest rate has been received both positively and negatively. On a positive note, the Fed ended bond buying which has stimulated confidence in the US Dollar. However, the Fed’s continued delay to a rate increase and their refusal to give indications as to the timing of an increase has prompted a lot of traders to invest elsewhere.
UPDATE
The Euro to US Dollar exchange rate extended declines during the North American session as US GDP data printed more strongly than expected and German Consumer Price data added to concerns that the Eurozone’s largest economy is struggling.
If tomorrow’s Consumer Price Index and employment figures for the currency bloc as a whole support the case in favour of the European Central Bank introducing additional stimulus measures, the EUR/USD exchange rate could trend lower into the weekend.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Swiss Franc,0.9467,
US Dollar,,Euro,0.7848,
US Dollar,,Pound,0.6203,
US Dollar,,New Zealand Dollar,1.2569,
Swiss Franc,,US Dollar,1.0562,
Euro,,US Dollar,1.2740,
Pound Sterling,,US Dollar,1.6220,
New Zealand Dollar,,US Dollar,0.7955,
[/table]
