The Euro to US Dollar (EUR/USD) exchange rate was trending within a limited range on Friday morning.
As traders await Eurozone inflation data, the shared currency is trending statically versus its most traded currency rivals. The inflation data will be particularly significant given that the lack of price pressure in the Euro-area is of serious concern to the European Central Bank (ECB). Policymakers are likely to call for expansion to the quantitative easing program should inflation remain low.
The US Dollar has seen comparatively subdued trade of late amid mounting uncertainty regarding the timing of a Federal Reserve rate hike. Fed policymakers have given many divergent opinions on the subject which has only fuelled negative trader sentiment. The University of Michigan Confidence report is likely to provoke US Dollar volatility.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1371.
EUR/USD Conversion Rate Predicted to Soften as VW Scandal Continues to Weigh on Euro Demand
The Euro to US Dollar (EUR/USD) exchange rate edged lower by around -0.6% on Thursday afternoon
With the Volkswagen scandal causing significant unknowns with regards to the extent of potential damage to the German economy and with the potential for far more cars having to be recalled than originally anticipated, demand for the shared currency dampened on Thursday. Even the weak position of the US Dollar wasn’t enough to provoke single currency gains.
Also weighing on demand for the shared currency was a dovish speech from European Central Bank Governing Council member Ewald Nowotny. The official stated that both headline and core inflation are ‘clearly’ below target and that it would be appropriate to expand monetary stimulus in order to provoke price pressures. ‘The ECB is using the monetary-policy instruments available, but in my view it is quite obvious that in the current economic situation additional sets of instruments are necessary. These include structural measures,’ Nowotny, who also heads the Austrian central bank, said in a speech in Warsaw at a conference on boosting competitiveness in the European Union.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1402.
USD/EUR Exchange Rate Forecast to Hold Gains after US Consumer Prices Avoid Negative Territory
Despite having seen better-than-expected domestic data results, the US Dollar downtrend is primarily the result of delayed bets regarding the timing of a Federal Reserve benchmark rate hike. With Fed officials making divergent statements with regards to hiking the cash rate or waiting for the global economic situation to improve, the US asset has seen significant losses of late.
The Consumer Price Index came in at 0.0% despite predictions of a drop to -0.1%. However, inflation remains far below target which is likely to cause yet more delays with regards to a Fed rate hike. The lack of global price pressures is a danger sign for many economists who fear that central bank monetary policy no longer has the same clout as in the past.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1360 today.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Fluctuate on US Data
In addition to US Consumer Prices, the Core Consumer Price Index, Average Weekly Earnings, Initial Jobless Claims, the Philadelphia Fed and the Monthly Budget Statement may all provoke changes for the Euro to US Dollar (EUR/USD) exchange rate.
Friday is likely to see increased EUR/USD volatility with several domestic data publications with the potential to provoke movement. The Eurozone Consumer Price Index will be significant given that it fell into negative territory previously. In terms of US data, the University of Michigan Confidence report is likely to influence EUR/USD change.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1495 during Thursday’s European session.