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Euro to US Dollar (EUR/USD) Exchange Rate Climbs as Economists Anticipate Fed Rate Hike Delays, Is there an Inflation Threat in Europe?

Euro Exchange Rates Today

The Euro to US Dollar (EUR/USD) exchange rate climbed during Wednesday’s European session as investors priced in the possibility of delays in the US Federal Reserve hiking interest rates.

US Dollar to Euro (USD/EUR) Exchange Rate Forecast

Some economists are forecasting the Federal Reserve will become more dovish in coming months as the stronger US Dollar weighs on the global economy.

Foreign exchange expert James Swanson commented: ‘We are seeing broader earnings weakness in sectors that are totally US, so that is probably a bigger factor than the Dollar. The Fed probably views the stronger Dollar as doing some of the tightening for them, so the fact we are getting some weak earnings means they can wait a little longer to around September.’

Although the Fed has quite clearly ruled out any interest rate hikes at next week’s meeting, many economists have predicted that June will see higher borrowing costs materialise.

Many currencies have fallen against the US Dollar in anticipation of the eagerly awaited US rate hikes.

Investment expert Michael Vogelzang commented: ‘If the Fed raises rates, that’s only going to exacerbate that problem and you will see additional pressure on oil and emerging market economies.’

Meanwhile, industry experts are warning that inflation threats are prominent in Europe rather than the US as previously thought—the US Federal Reserve will hike rates to counteract inflationary pressures, but the Eurozone could be in trouble.

Industry expert Cosimo Marascilo commented: ‘In the Eurozone, you have a central bank which is still pushing hard in terms of stimulus, and that’s good for inflation. In the US you have a central bank which might actually hike rates between June and September. The market thinks when the Fed hikes rates, any inflation pressure will be contained.’

Euro to US Dollar (EUR/USD) Exchange Rate Forecast

The Euro to US Dollar (EUR/USD) exchange rate could be in for an interesting afternoon on Wednesday with the release of the US MBA Mortgage Applications and US Existing Home Sales figures.

Furthermore, the Eurozone Consumer Confidence ecostat will be out and could cause major movement in the Euro to US Dollar (EUR/USD) currency pair.

Any central bank statements from either the European Central Bank (ECB) or US Federal Reserve could also cause USD/EUR fluctuations.

The US Dollar to Euro (USD/EUR) exchange rate is trending in the region of 0.9363. The Euro to US Dollar (EUR/USD) exchange rate is trading at 1.0683.