EUR/USD Exchange Rate Muted amid Lower-Than-Expected German Consumer Confidence
The Euro to US Dollar (EUR/USD) exchange rate is rangebound during today’s session as a disappointing German consumer confidence reading weighs on EUR.
At the time of writing, the EUR/USD exchange rate is trading at around €0.1273 with minimal market movement.
Euro (EUR) Directionless in Response to Underperforming German Consumer Confidence
The Euro (EUR) is mixed against the US Dollar (USD) following a lower-than-expected print of German consumer confidence.
January’s German consumer confidence has plummeted to -6.8 following the downwardly revised -1.8 in December and has dropped further than the -2.7 forecast.
January’s reading is the lowest since June and has been caused by rising inflation as well as a significant surge in coronavirus case numbers.
Currently, Germany is preparing for a fifth wave of coronavirus as the fourth wave still spreads through the country.
Germany has implemented restrictions in a bid to slow the increasing spread of Omicron, however this has hurt Christmas trade.
As Omicron continues to spreads globally, the World Health Organisation (WHO) is requesting people rethink their Christmas plans.
Tedros Adhanom Ghebreyesus, Director General of the WHO, said:
‘An event cancelled is better than a life cancelled.
‘There is now consistent evidence that Omicron is spreading significantly faster than the Delta variant, and it is more likely people vaccinated or recovered from Covid-19 could be infected or re-infected.’
US Dollar (USD) Mixed as ‘Build Back Better’ Bill Falters
The US Dollar (USD) is muted against the Euro (EUR) as US President Joe Biden’s ‘Build Back Better’ bill may potentially be shelved by US Congress.
The ‘Build Back Better’ bill is a $1.75 trillion legislation aimed at helping rebuilding the US economy following the global pandemic.
However, Senator Joe Manchin, a key influential voter, retracted his support for the bill on Sunday, deeming it more hindrance than support for the US economy.
‘I have always said, ‘If I can’t go back home and explain it, I can’t vote for it.’ Despite my best efforts, I cannot explain the sweeping Build Back Better Act in West Virginia and I cannot vote to move forward on this mammoth piece of legislation.’
This has since triggered Goldman Sachs to slash its 2022 US growth expectations which is further weakening the ‘Greenback’.
Furthermore, USD is being additionally hampered by the risk-on sentiment, placing pressure on the safe-haven currency.
EUR/USD Forecast: Will a Lacklustre of Data Scheduled Hinder USD?
Looking ahead, the Euro US Dollar exchange rate is likely to remain mixed in response to a lack of data scheduled to be released throughout the rest of this week’s session.
The ‘Greenback’ may be weighed on by the final reading of the US GDP which is expected to confirm growth slowed in the third quarter , as well as the ‘risk-on’ mood, should current sentiment prevail.
Meanwhile, the single currency is likely to remain vulnerable to Omicron developments as numbers continue to rise across Europe.