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Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Trend Close to 1.1 after Slower-than-Expected US GDP

UPDATE

On Friday morning the Euro to US Dollar (EUR/USD) exchange rate edged higher by around 0.2%.

Despite the fact that German retail sales data missed estimates, speculation of improving Eurozone Consumer Prices has seen the shared currency advance against the Dollar ahead of the Eurozone Inflation data publication.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1007.

Yesterday…

EUR/USD Conversion Rate Edges Higher after Rising Eurozone Economic Confidence

The Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.4% on Thursday morning.

After having dived overnight in response to the Federal Open Market Committee (FOMC) statement which boosted speculation of a December rate hike, the common currency recovered a fraction of its losses on Thursday morning. This is mostly in response to a US Dollar downtrend caused by traders taking profits following the ‘Greenback’ (USD) surge. However, the single currency is still holding a comparatively weak position amid the prospect of widening policy divergence between the Federal Reserve and the European Central Bank (ECB).

Thursday’s European economic data produced mostly positive results which aided the Euro recovery. German labour market data saw the Unemployment Rate hold at 6.4% in October, with Unemployment Change showing -5,000 fewer unemployed in Germany. In addition, demand heightened following October’s Eurozone Economic Confidence survey which came in at 105.9; bettering the median market forecast drop from 105.6 to 105.1.

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0967.

USD/EUR Exchange Rate Predicted to Hold Losses ahead of Q3 US Growth Data

As mentioned above, the US Dollar rallied in response to the hawkish statement from FOMC policymakers. Whilst the statement didn’t give any explicit clues as to a December rate hike, the positive sentiment towards the domestic economy was seen as a clear sign the tides are soon to change with regards to policy outlook. What’s more, the statement didn’t make any mention of the fragile global economic situation which is a departure from recent meetings.

‘There is no doubt an earlier move may give the markets greater clarity and more confidence,’ said Chris Brankin, chief executive officer of TD Ameritrade Asia in Singapore. ‘However, focussing on the timing is feeding uncertainty.’

The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0902 during Thursday’s European session.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast: US GDP to Provoke Volatility

With several influential US economic data publications due on Thursday afternoon, the Euro to US Dollar (EUR/USD) exchange rate is likely to see significant volatility during Thursday’s European session. The US Gross Domestic Product for the third-quarter will be of particular significance given that rate hawks will be looking for examples of a positive domestic economic recovery to justify a near-term rate hike.

Friday is also likely to see heightened EUR/USD volatility with Eurozone Consumer Prices data due for publication. The lack of price pressures in the Euro-area is one of the primary reasons that the ECB are looking to ease policy in the near-term. If inflation picks-up, the common currency could see a sizable uptrend.  US consumption data will also have a significant impact on EUR/USD movement on Friday.

The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.0980 during Thursday’s European session.