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Euro to US Dollar (EUR/USD) Exchange Rate Forecast: Pairing on Downtrend ahead of ECB Rate Decision Today

EUR/USD Exchange Rate News: Pairing Slumps in Anticipation of European Central Bank (ECB) Rate Decision

Trading has turned dovish on the common currency (EUR) in advance of the European Central Bank (ECB) Rate Decision, in spite of the general expectation that there will be no change in policy at this particular meeting. After US MBA Mortgage Applications showed growth of 11.8% on the week the ‘Greenback’ (USD) strengthened somewhat, although traders remain of mixed opinions regarding the possibility of a 2015 Fed interest rate rise.


Despite earlier caution, trading on the Euro (EUR) is hawkish this morning as investors remain unconvinced that the European Central Bank (ECB) will move to introduce fresh monetary loosening measures at its October meeting.

Euro (EUR) Remained Dominant in spite of Weak German Data as US Dollar (USD) Retreated on US Building Permit Contraction

In spite of German Producer Prices having demonstrated a sharper contraction than expected yesterday, falling to -2.1% rather than the forecast -1.8%, the single currency (EUR) remained on an uptrend against the ‘Greenback’ (USD) throughout much of Tuesday. Although traders had been concerned that a continued trend of weak Eurozone data could prompt the European Central Bank (ECB) to introduce fresh monetary loosening measures in order to stimulate the local economy, the general belief seems to be that Thursday’s policy meeting would not see any change in stance.

Hopes for an imminent interest rate rise from the Fed, on the other hand, took something of a blow as US Building Permits were shown to have unexpectedly contracted in September. Signalling continued weakness in the domestic housing market, and by extension the wider economy, this saw another drop in demand for the US Dollar. Speeches from Federal Open Market Committee (FOMC) members offered no support for the currency, as policymakers failed to make any substantial reference to monetary policy.

Trader Optimism Shores up EUR/USD Conversion Rate Today ahead of October European Central Bank (ECB) Rate Decision

The EUR/USD currency pair is likely to see fairly limited movement throughout Wednesday, with the only major domestic data release the weekly MBA Mortgage Applications figure. However, after last week saw a substantial slump in applications another weak reading could compound investor worries over the current state of the local housing market. A general atmosphere of risk aversion continues to hang over markets this morning, also helping to shore up demand for both the Euro and ‘Buck’ in lieu of any particularly supportive data.

EUR/USD Exchange Rate Forecast: Dovish ECB May Fail to Weigh on Strengthened Euro

Thursday will be a more volatile day for the EUR/USD exchange rate with the publication of the ECB Rate Decision and any accompanying comments from policymakers, alongside a raft of fresh US figures including Jobless Claims and Leading Indicators reports. Should ECB President Mario Draghi conform to expectations and attempt to talk down the strength of the common currency, however, this is likely to have a relatively limited impact upon the pairing.

Stronger US figures could spur a rally for the US Dollar, particularly if the September Leading Indicators defy expectations to print more positively. If the outlook of the world’s largest economy remains muted though this could see traders dialling back bets on a potential December Fed interest rate move.

Current EUR, USD Exchange Rates

At time of writing, the Euro to US Dollar (EUR/USD) exchange rate was climbing in the region of 1.1362, while the US Dollar to Euro (USD/EUR) pairing slumped around 0.8799.