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Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Soften after US Labour Data Bettered Expectations

EUR/USD Conversion Rate Predicted to Decline after German Industrial Production Slowed

The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.3% on Friday afternoon.

After strengthening considerably on Thursday in response to an unexpected rise in Eurozone economic confidence, the Euro declined on Friday. This is mostly due to traders taking advantage of attractive selling opportunities, but also in response to a combination of weak domestic data and US Dollar strength. Of particular disappointment was German Industrial Production data which failed to meet with expectations on both a monthly and annual basis in November.

‘Looking ahead, ongoing uncertainties in China, a possible slowdown in the US economy and, more generally, the negative effects from record-low oil prices indicate that a quick rebound in industrial production is anything but certain,’ said Carsten Brzeski, an economist at ING in Frankfurt.

‘We expect only modest growth in the fourth quarter, but improving survey data and rising manufacturing orders point to a pickup in economic activity in early 2016,’ said Clemente De Lucia, an economist at BNP Paribas in London.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0896.

USD/EUR Conversion Rate Predicted to Strengthen after Non-Farm Payrolls Exceeded Expectations

Although intervention from China’s government to shore up stock prices saw heightened demand for high-yielding assets, the US Dollar held a position of strength thanks to speculation that domestic data would produce positive results. As Friday progressed the US Dollar found greater support as risk-appetite dampened in line with global stock declines. Aiding the US Dollar appreciation was positive domestic data which saw unemployment hold at 5.0% and Change in Non-Farm Payrolls eclipse expectations.

‘A very strong jobs report, with nonfarm payrolls handily beating, is managing to pull the market’s focus back to the US Dollar and potential for Fed rate hikes this year,’ said John Hardy, Denmark-based head of foreign-exchange strategy.

The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0801 during Friday’s European session.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Hold Gains into Weekend

Although there will be a number of US ecostats with the potential to provoke volatility, such as Wholesale Inventories and a speech from Federal Reserve official John Williams, the EUR/USD exchange rate is likely to hold losses given the extent of the depreciation.

In terms of data next week, the most significant ecostats pertaining to the Euro to US Dollar (EUR/USD) exchange rate will be Thursday’s German Gross Domestic Product and Friday’s US Advance Retail Sales and University of Michigan Confidence.

The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.0928 during Friday’s European session.