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2016 Euro US Dollar Exchange Rate Forecast: EUR USD Flounders Above Lows This Week

Euro US Dollar currency forecast

  • 2016 Euro US Dollar Exchange Rate Edges Higher on Friday – Recovers to near 1.06
  • Quiet Thanksgiving Trade Limits USD Bullishness – Friday’s US goods trade data disappoints
  • EUR Forecast: Eurozone Inflation Results Ahead – As well as unemployment
  • USD Forecast: Bullishness Could Continue to Fade – US stats throughout week could boost USD

2016 Euro US Dollar Exchange Rate Continues to Fluctuate on Tuesday

Despite an increase in demand for the US Dollar and weakness in the Euro, the 2016 Euro US Dollar fluctuated in a relatively narrow region on Tuesday as forex traders cast their focuses elsewhere.

Eurozone markets became increasingly jittery due to anxiety ahead of Sunday’s Italian referendum and Austrian presidential election.

Meanwhile, the US traders were impressed by news that the US’ Q3 Gross Domestic Product (GDP) estimate came in at a strong 3.2%.

Despite this, the EUR USD exchange rate remained above the level of 1.05 with no issues due to levels of key psychological support.

(Previously updated 16:32 GMT 28/11/2016)

2016 Euro US Dollar Exchange Rate Fluctuates Monday

After soaring on Monday morning, the 2016 Euro US Dollar exchange rate fell flat again in the afternoon as American markets opened and returned some strength.

Monday initially saw a continuation of Friday’s movement, as the Euro was bought up from its cheap lows while the US Dollar was sold from its highs.

The Euro’s demand throughout the day was also solid due to a neutral tone from European Central Bank (ECB) President Mario Draghi, who stated in a speech that the future of the Eurozone’s monetary policy would be made clearer in December.

USD demand was initially lighter due to uncertainty surrounding calls for US election vote recounts in some key swing states, but the US Dollar performed solidly on Monday afternoon regardless.

(Published 07:00 GMT 28/11/2016)

The 2016 Euro US Dollar exchange rate saw another poor performance last week as underlying factors in the Euro dragged it down while the US Dollar was able to hold onto lingering bullish sentiment despite having already rallied for two weeks.

EUR USD edged back towards the week’s opening levels of almost 1.06 on Friday after plummeting to 1.05 on Thursday morning; the pair’s lowest level since March 2015.

Euro (EUR) Recovers from Lows as US Dollar (USD) Winds Back

The Euro struggled last week after two solid weeks of bearishness. Investors grappled with whether or not to return to the shared currency as underlying downside factors lingered in the single currency.

The most relevant and weighty of these factors was the expectation that the European Central Bank (ECB) was planning to extend its monetary stimulus measures in December’s upcoming policy meeting.

Political uncertainty has also struck the Eurozone since Donald Trump was elected as the next US President, amid fears that populist protectionism would also rise in the Eurozone.

A wave of protectionism has been perceived as the biggest threat to the Euro project, due to the possibility that a nation may pull out of the Eurozone bloc. The ECB stated that political uncertainty since the Brexit and Trump votes had also affected Eurozone financial stability;

‘The financial stability implications for the Euro area stemming from changes in US economic policies are highly uncertain at this point in time. The Euro area economy may be directly impacted via trade channels and by possible spillover effects from higher interest and inflation rate expectations in the US.’

While these factors weighed on the Euro throughout the week, the week’s Eurozone ecostats came in strongly. Markit’s November PMIs beat expectations and Germany’s growth stats met preliminary results.

These supported the shared currency slightly when traders bought it up from its cheapest levels on Friday and EUR USD recovered slightly.

US Dollar (USD) Slips from Highs after Underwhelming Goods Balance Report

The US Dollar’s Trump bullishness slowed last week. After the ‘Greenback’ had advanced solidly since early-November on a combination of hopes for short-term economic boosts and Federal Reserve rate hike bets, USD trade began to test the limits of its highs and its advances slowed.

Bets of a December Fed rate hike remained at over 90% throughout the week, which gave the US Dollar significant support and helped it to hold its highs, but it struggled to advance further.

Wednesday’s preliminary October durable goods orders results surged from -0.3% to 4.8% which highly impressed traders and served as a new boost for USD demand, but by Friday the US Dollar had shed most of these gains.

This was partially due to light USD trade on Thursday, when US markets were closed to observe the Thanksgiving holiday. Friday’s US goods trade figures from October also failed to support the ‘Greenback’, coming in at a disappointingly low -$62b.

2016 Euro US Dollar Exchange Rate Forecast: Slew of Key Eurozone and US Datasets This Week

While last week’s 2016 Euro US Dollar movement factors were largely political, the exchange rate could see considerable economic-related movements in the coming week due to the slew of data due from both the Eurozone and the US.

Monday kicks off the week with European Central Bank (ECB) President Mario Draghi holding a speech at European Parliament in Brussels, which could influence Euro direction if it hints at upcoming monetary policy changes.

Tuesday’s session will be vital for data as it includes Germany’s preliminary November Consumer Price Index (CPI) results and the US Q3 Gross Domestic Product (GDP) results, followed by November US consumer confidence.

Wednesday will see the publication of Germany’s November unemployment results and the Eurozone’s preliminary November CPI figures.

The Eurozone’s overall October unemployment figures will be published on Thursday, followed by ISM’s November Manufacturing print for the US during the American session.

Lastly, the key US Non-Farm Payroll results from November will be published on Friday, finishing a week filled with influential data reports.

Each day of the week has the potential to influence the 2016 Euro US Dollar exchange rate’s trajectory, although as December begins EUR USD is likely to fall again as traders adjust ahead of the month’s key central bank meetings.