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Euro US Dollar Exchange Rate Forecast to Rise if German Trade Surplus Remains Buoyant

The Euro could climb against the US Dollar this week on German trade data, though US trade stats are also incoming over the week.

  • EUR USD rate trended around 1.07 last week – USD EUR rate dropped from 0.93 to 0.92
  • Euro US Dollar advanced on PMI stats last week – PPI stats pointed to higher inflation
  • US Dollar destabilised by Trump’s orders – Concerns persisted about new President
  • German trade balance and Italian production due this week – US Dollar shifts possible on trade data, confidence score

The US Dollar failed to make much in the way of progress last week, due to continued concerns about the stability of a Trump presidency.

Euro US Dollar Recap: Favourable Eurozone PMI Figures Enable EUR USD Advance

Last week’s Eurozone data brought investor support for the Euro on Wednesday, when the overall manufacturing PMI rose from 54.9 to 55.2. Other PMI positivity came on Friday, when the services and composite PMIs remained in the growth range for in their finalised forms.

Other gains came from the PPI stats for December, which climbed to the extent that higher Eurozone inflation was forecast in the future.

Closing the week on a slightly sour note was the annual retail sales result for December, which showed Eurozone-wide slowdown from 2.5% to 1.1%. Additionally, the monthly figure failed to rise into a positive range despite forecasts.

US Dollar Instability Caused on Trump-Turnbull Call, Surprise Migrant Ban

The US Dollar started last week’s trading in a poor position, having crashed due to a Trump executive order preventing travel into the US from a number of Middle Eastern and African countries.

As well as this fresh surprise to react to, investors were also put off by an apparently fractious phone call between Trump and the Australian Prime Minister over the matter of a refugee transfer agreed during Barack Obama’s time as President.

Friday showed a rise in unemployment and non-farm payrolls in January, though lacklustre wage growth left investors on the fence about how the Federal Reserve would next act.

Weekly EUR USD Forecast: Eurozone Production and Trade Balance Stats in Focus

The week’s major Eurozone announcements are expected to be limited to the end of the week, covering the German December trade balance on Thursday and the Italian industrial production figures on Friday for the same month.

In the former case, a major trade surplus of 22.6bn was previously recorded, while prior Italian production levels grew by 3.2% on the year. Annually, a marginal improvement in Italian production is forecast to 3.3%.

US data releases will also be limited to two days of key data, consisting initially of Tuesday’s December trade balance. At the time of writing, no change was forecast from the previous deficit of -45.2bn.

Asides from a number of Fed speeches dotted throughout the week, the other announcement to watch out for will be Friday’s University of Michigan consumer sentiment index, which will give the an indicator of how consumers think Donald Trump is affecting the US economy.

The latest predictions haven’t been too good on this note, with a dip from 98.5 to 97.8 forecast.

Recent EUR USD Interbank Exchange Rates

At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.07 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.92.