Thanks to a strengthened Eurozone Consumer Price Index the EUR/USD exchange rate has been on a bullish run today.
Euro/USD Exchange Rate Slumped to Two-Month Low after Hawkish FOMC Hint at 2015 Interest Rate Hike
Although traders were unsurprised by the Federal Open Market Committee (FOMC) deciding to leave interest rates unchanged at Wednesday’s policy meeting markets were taken off guard by the more hawkish tone of the accompanying statement. With policymakers indicating that a December interest rate rise remains under consideration, dropping reference to negative global economic conditions, the US Dollar (USD) saw a substantial surge in demand. In response the EUR/USD exchange rate slumped markedly to a two-month low of 1.0903, with the single currency (EUR) sliding across the board.
Nevertheless, Thursday saw the single currency quickly begin to rally with the publication of stronger-than-expected German Unemployment Change and German Consumer Confidence Index figures. The number of unemployed individuals in Germany was shown to have fallen by 5,000 in October as domestic inflation rose further than expected on the year to offer reassurance to investors that the Eurozone’s major economy remained in a relatively robust state, in spite of recent concerns connected to the Volkswagen emissions scandal.
US Dollar (USD) Softened as Domestic Confidence Index Declines, Euro (EUR) Bolstered by Stronger Eurozone Inflation
In spite of German Retail Sales falling slightly short of forecast on Friday morning the single currency was buoyed further by the publication of the October Eurozone CPI. As inflationary pressure within the currency union was demonstrated to have returned to 0% on the year, avoiding a second month of negative inflation, demand for the Euro continued to rise.
The ‘Greenback’, meanwhile, was dealt something of a blow as both the domestic Personal Consumption Expenditure Core and University of Michigan Confidence Index failed to print at an increase. While neither result was sufficiently dovish to rule out the chance of a December policy move from the FOMC the odds were somewhat reduced in the wake of this discouraging data. This allowed the EUR/USD exchange rate to surge to a daily peak of 1.1068, regaining almost all of the ground lost in Wednesday’s downtrend.
EUR/GBP Exchange Rate Forecast: US Manufacturing PMI Could Prompt Volatility for Pairing
Particularly influential Eurozone data will be limited in the earlier week, with the domestic PMIs being finalised rather than fresh figures. As such, it is likely to be upcoming US results which drive movement for the EUR/USD pairing, with pundits looking for greater support for imminent Fed monetary tightening.
Monday’s ISM Manufacturing PMI could spur the US Dollar onto an uptrend, with forecasts anticipating a minor increase in output from 50 to 50.2. While not especially bullish, any sign of improvement within the domestic manufacturing sector would likely offer a solid rallying point and spur a fresh round of interest hike bets.
Current EUR, USD Exchange Rates
At time of writing, the Euro to US Dollar (EUR/USD) exchange rate was trending bullishly in the region of 1.1022, while the US Dollar to Euro (USD/EUR) pairing slumped around 0.9067.