EUR/USD Exchange Rate Set to Hold as Markets Close for Independence Day
The Euro (EUR) is trading level against the US Dollar (USD) so far this morning, and is expected to continue in this vein as US markets remain closed for the 4 July weekend.
At the time of writing, the Euro US Dollar exchange rate trades at $1.1868, virtually unchanged from this morning’s opening rate.
Euro Buoyed as Eurozone Service Sector Growth at 15-Year High
The Euro is currently enjoying modest gains over the US Dollar as EUR investors welcome the publication of the Eurozone’s latest services PMI.
June’s finalised figures, published this morning, post a marginal increase upon the preliminary reading, at 58.3 points versus 58, and up from 55.2 in the previous month. This growth represents the steepest pace of expansion in the service sector since July 2007, buoying spirits across the board as the Chief Business Economist at IHS Markit observes: ‘companies benefited from the manufacturing sector’s upturn, customers adapted to life during a pandemic and prospects remained relatively upbeat.’
This latest news may see the Euro rally against its currency partners, signalling increased trading confidence amidst a recovering economy. Gains against the US Dollar are likely to be negligible, however, as new covid outbreaks across Europe favour risk-off sentiment.
US Dollar in Limbo as Traders Anticipate FOMC Minutes
The US Dollar suffered a slight dip late last week as mixed US data dented the currency’s prospects. Headline job creation in June beat forecasts; yet unemployment ticked higher and workforce participation held level, limiting ‘Greenback’ trader confidence.
These figures do little to threaten the ‘Buck’s’ overall performance, though, as the US Dollar sustains gains won by the Federal Reserve’s (Fed) hawkish policy adjustment three weeks ago. Analysts think the currency has potential to climb further still, as the coronavirus resists defeat: ‘a sanguine risk climate may not be entirely detrimental for the greenback at this time.’
Later in the week, USD is likely to see movement off the back of Tuesday’s ISM Non-manufacturing PMI, as well as the FOMC Minutes, due for release in the second half of Wednesday’s session. Any insight into when the FOMC might taper its asset purchases could boost U.S. interest rates, while signs of growing concerns over the inflation overshoot may damage the currency.
EUR/USD Forecast: Investors Await Data Releases on Both Sides
The currency pairing is unlikely to see significant movement today as investors wait for catalysts in tomorrow’s data releases. German factory orders have the potential to boost the Euro if growth reaches the 1.3% consensus predicted, while a drop in German economic sentiment could damage the currency’s performance.
Over in the US, Tuesday’s ISM Non-Manufacturing PMI could elevate the US Dollar, while publication of the FOMC minutes on Wednesday are likely to stimulate trader activity as the Fed’s next steps are indicated.