The Euro steadily gained on the US Dollar last week and could make additional advances this week if inflation stats beat forecasts.
- EUR USD rate advanced from 1.05 to 1.06 last week – USD EUR traded between 0.94-0.93
- Euro weakened on late German inflation last week – Eurozone and German confidence rose
- US Dollar dropped on Trump’s Syria involvement – US-Russia relations said to be at ‘all-time low’
- Euro rally possible on overall inflation – Further US-Syria escalations could weaken USD
While it did fluctuate at points, the Euro was ultimately able to advance against the US Dollar last week on shaky demand for the USD.
Major data included German and Eurozone ZEW confidence rising in April, although later German inflation showed a slowdown in March.
This lowered hopes that the European Central Bank (ECB) would be acting on interest rates anytime soon, although incoming inflation rate figures may override this sentiment.
The US Dollar lost out against the Euro at the end of last week, on signs that the US may not be able to extricate itself from the Syrian civil war. The US publically entered the conflict on April 6th by striking a Syrian regime airbase in response to an alleged regime chemical weapons attack.
Russia, Syria’s main ally, was quick to condemn the action and tensions rose further when Russia vetoed a UN resolution aimed at investigating the facts behind the chemical incident.
The main direct US news next week will come on Friday, when existing home sales for March are announced. These are expected to show a rise from 5.48m to 5.58m, which could raise the US Dollar’s value.
If it looks like the US housing market is still active despite high prices in some areas, then the US Dollar could appreciate against the Euro.
Outside of US domestic data, the US Dollar is most likely to be moved next week by the Syrian situation.
If it looks like Russia is committed to defending its Middle-Eastern ally then the US may be forced to back off, despite its explosive entry into the conflict against the Assad regime.
This would further lower confidence in Donald Trump’s ability to commit, but moving into further hostilities against the Syrian and Russian governments is also likely to sap confidence in the US Dollar.
Last week, Trump stated that;
‘Things will work out fine between the USA and Russia. At the right time everyone will come to their senses & there will be lasting peace!’
At present, the only real chance for a US Dollar rally on next week’s news is for this optimistic sentiment to bear fruit on the political level.
Recent Interbank EUR USD Exchange Rates
At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.06 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.94.