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EUR USD Exchange Rate Rallies as US Political Uncertainty Pressures US Dollar

  • US Dollar Pressured By Clinton Emails – Increases Chances of a Trump Presidency
  • EUR USD Exchange Rate Recovers – Following subdued Eurozone CPI report.
  • US Manufacturing Data Ahead – US Dollar may rise if figures impress.

The EUR USD exchange rate managed to break past 1.10 this morning after the Euro (EUR) clawed back its losses from yesterday as US political uncertainty countered a muted Eurozone CPI report.

US Dollar (USD) Exchange Rates Marred by Clinton Email Controversy

US Dollar (USD) exchange rates have been weakened by reports that the FBI has opened a new inquiry into Democratic presidential candidate Hillary Clinton, looking into her use of a private email server while serving as US Secretary of State.

The news comes just a week before the US is set to vote in the US presidential elections and has helped close the gap in the polls between Mrs Clinton and her Republican rival Donald Trump, who was seen as all but out of the race after a video emerged of him making lewd remarks about women a few weeks ago.

The Euro US Dollar exchange rate gained as markets began to worry about the possibility of a Trump presidency as his radical rhetoric and lack of experience causes him to be generally perceived as an economic wildcard by investors.

The ‘Greenback’ was also pressured lower against peers like the Pound (GBP) and Euro (EUR) by receding bets that the Federal Reserve will raise interest rates in December as traders become dovish in the face of political uncertainty.

Euro (EUR) US Dollar Exchange Rate Recovers after Subdued Eurozone Data

The Euro was hammered by the US Dollar (EUR USD) on Monday following the release of the Eurozone consumer price index, which only saw a slight rise to 0.5% in October, up from 0.4% the previous month. The latest Eurozone GDP figure was also unable to impress as it remained frozen at 1.6% in the third quarter.

While the figures were not entirely disappointing investors will be worried that they will not be enough to help stave off further monetary stimulus from the European Central Bank (ECB). Recent reports indicate that the ECB is preparing to extend its quantitative easing programme past March 2017 in order to counteract any slowdown in the Eurozone and to ensure that inflation continues rising.

The Eurozone will be hoping for some more impressive data releases later in the week will help reverse market sentiment and allow the Euro to continue last week’s advances against the ‘Greenback’.

EUR USD Exchange Rate Forecast: Euro May Slide if US Manufacturing Data Impresses

The Euro to US Dollar exchange rate may tumble later today as the US ISM manufacturing survey is expected to post a rise to 51.7 in October – up from 51.5 the month before. US construction spending is also forecast to rise from -0.7% to 0.5% in September, which should help reinforce the US Dollar and up the chances of a Fed rate hike later this year.

Meanwhile the Euro may suffer from the complete absence of Eurozone data today with which to counter any advances from the US Dollar – especially if it causes investors to remain focused on yesterday’s lacklustre CPI and GDP figures.

The single currency will therefore have to wait until Germany’s Unemployment figures are released on Wednesday for a catalyst for movement. But with predictions that the unemployment rate may hold at 6.1% in October, the Euro could tumble amid further evidence of stagnating growth in the Eurozone.

Current Interbank Exchange Rates

At the time of writing the EUR/USD exchange rate was trending around 1.10 and the USD/EUR exchange rate was trending around 0.90.