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Euro to US Dollar (EUR/USD) Exchange Rate Forecast: Euro comes out Strong ahead of Momentous FOMC Decision

 

The Euro to US Dollar (EUR/USD) exchange rate has risen considerably today ahead of a major day for the US Dollar and a crucial weekend for the Eurozone.

EUR/USD Exchange Rate News: Common Currency Triumphs after ECB Bulletin gives the All-Clear

The Euro (EUR) has risen by 0.4% against the US Dollar (EUR/USD) today, just one of many advances for the single currency. While the only notable negative performances include narrow trending against the Indian Rupee (EUR/INR) and the Polish Zloty (EUR/PLN), the Euro has risen by 0.5% against the Canadian Dollar (EUR/CAD), 0.6% against the Japanese Yen (EUR/JPY) and 0.7% against the Australian Dollar (EUR/AUD). The best advance has been by 1% against the South African Rand (EUR/ZAR).

While yesterday saw few positives for the Eurozone with regard to policy outlook, today has seen the release of a slightly optimistic European Central bank (ECB) Economic Bulletin. The bulletin includes statements such as ‘Looking further ahead, the Euro area recovery is expected to continue, albeit at a somewhat weaker pace than previously anticipated’. The bulletin also mentioned that the Governing Council ‘emphasises its willingness and ability to act’ with specific mention to the ‘instrument’ of quantitative easing.

US Dollar (USD) Exchange Rate Less Positive ahead of Crucial US Economic Releases

The US Dollar’s (USD) performance today has been less consistent than the Euro (EUR), with the ‘Greenback’ falling against many rivals this morning. These include drops of more than -0.3% against the Euro (USD/EUR), the Polish Zloty (USD/PLN), the Indian Rupee (USD/INR) and the Norwegian Krone (USD/NOK). On the other hand, the ‘Buck’ has risen by 0.3% against the Japanese Yen (USD/JPY), 0.4% against the Australian Dollar (USD/AUD) and 0.6% against the South African Rand (USD/ZAR).

The last major US releases of note were the CPIs for August; most damagingly, the figure Excluding Food and Energy remained at 1.8% instead of rising to 1.9% as predicted. The big news, of course, is yet to come – the Federal Open Market Committee’s (FOMC) Interest Rate Decision. The latest surveys have between 30%-47% of economists expecting a rate hike, but as Phil Orlando, Chief Equity Market Strategist and Senior Portfolio Manager at Federated Investors points out, ‘It’s really no better than a coin flip’.

EUR/USD Exchange Rate Forecast: All to Play for as Predictions for Fed Rate Hike Dissipate

The remainder of the week has few Eurozone economic publications of note, therefore the biggest deciding factor in the EUR/USD pairing will be the FOMC interest rate decision. This week started with a great deal of optimism for a US interest rate hike with forecasts putting the potential rise from 0.25% up to 0.44%, but this number has dropped progressively as the decision has drawn closer, falling to 0.38% on Tuesday before returning to an unchanged expectation of 0.25% today. Suffice it to say, at this point even a rise to 0.26% would likely send the ‘Buck’ (USD) skyrocketing, therefore the outcome of the decision will be watched closely by economists and speculators around the world this evening.

Looking further ahead, the next major Eurozone event will come on Sunday when the Greek people enter polling stations for the second time this year to vote for their new prime minister.

Current EUR, USD Exchange Rates

The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1327 and the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8834 today.