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Euro US Dollar Exchange Rate Forecast: Central Bank Speeches to Trigger Major Movement Next Week

The Euro was able to close trading against the US Dollar in a position of strength last week, though the week to come could see these gains eroded if Eurozone data forecasts fall through.

  • EUR USD exchange rate climbed last week – Advance from 1.11 to 1.12 seen
  • Eurozone PMIs mixed over Friday – French positivity clashed with German and Eurozone drops
  • US Dollar damaged by Fed rate freeze last week – Odds of December rate hike raised
  • Monday to bring ECB speeches – Fed remarks also due

The US Dollar fluctuated after the notable Fed interest rate decision for September, mainly due to the implications for December’s meeting.

Euro Exchange Rate News: Mixed PMIs Failed to Dampen Confidence in EUR Last Week

The Euro was able to close off the previous week’s trading on a high note, thanks to a better-than-expected market reaction to the German, French and Eurozone-wide PMI flashes for September on Friday.

While the French composite, services and manufacturing PMIs all rose, less supportive were the Eurozone and German results which fell, with the exception of manufacturing.

Despite these signs of a slowdown in the Eurozone, investors seemingly took heart from the fact that as PMI flashes, the results are still not finalised, and could be revised upwards in the future.

US Dollar Exchange Rate Recap: Continued Fed Rate Freeze came with Hawkish Statement

The main US economic event last week was the Fed interest rate decision for September, which saw the rate remain at 0.5% once again.

Notably, however, the Fed issued a statement saying;

‘The committee judges that the case for an increase in the Federal funds rate has strengthened, but decided, for the time being, to wait for further evidence of continued progress toward its objectives’.

While typically obscure, this was broadly assumed to mean that conditions were almost ready for a December rate hike to take place, meaning that only positive US data until then would make such an outcome extremely likely.

The US Dollar fell when it was revealed that the Fed had held off acting once again, but rose on Friday after supportive Fed Kansas manufacturing stats came out.

long term Pound Euro forecast

Future EUR, USD Forecast: German Surveys and Draghi Speech Set to Shift Euro Next Week

The coming week will bring a large amount of impactful Eurozone economic announcements, along with a significant spread of Fed official speeches.

Movement may be caused on Monday for the Euro by the German Ifo business climate, current conditions and expectations results for September, all of which are forecast to rise.

Across the course of the day will also be a number of European Central Bank (ECB) official speeches, including one in the afternoon from ECB President Mario Draghi.

Speeches will also be the mainstay of US Dollar movement looking ahead, starting off on Monday with planned deliveries from Fed officials Neel Kashkari, Daniel Tarullo and Robert Kaplan.

On the data front, the US’s August new homes sales figure is scheduled for release; a shift down from 654k to 515k is expected.

Current EUR, USD Exchange Rates

At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.1228 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.8909.