Euro to US Dollar (EUR/USD) Exchange Rate Trends at 1.1632
After plunging to an 11-year low yesterday as a result of increased US Dollar demand and broad-based Euro selling, the Euro to US Dollar (EUR/USD) exchange rate recovered ground ahead of the publication of influential US reports.
The US Dollar edged slightly lower against several of its peers as economists bet that today’s Consumer Price Index will decline from 1.3% to 0.7%.
A sharper slowing in consumer price gains would reduce the odds of the Federal Reserve introducing additional stimulus measures and could help the EUR/USD currency pair move higher before the weekend.
EUR/USD Exchange Rate Plummets to 1.1575
After the European Court of Justice [EJC] ruled that the European Central Bank’s [ECB] promise to do ‘whatever it takes’ to save the Eurozone from financial collapse is legal, the Euro declined against the majority of its currency counterparts.
By effectively giving the ECB the green light to proceed with quantitative easing measures, the ECJ increased the odds of stimulus being rolled out at next week’s meeting.
The Euro also brushed fresh lows against the Pound in spite of Germany’s 2014 growth estimate meeting with forecasts.
The Swiss National Bank’s (SNB) surprise decision to remove its cap against the Euro and lower its interest rate pushed the Euro into freefall and the Pound Sterling to Euro (GBP/EUR) exchange rate was able to advance beyond 1.30 during European trading.
The Euro to US Dollar (EUR/USD) exchange rate was preparing to post a daily decline of -1.3% in spite of the US initial jobless and continuing claims figures disappointing expectations.
Applications for first time unemployment benefits unexpectedly climbed from a negatively revised 297,000 to 316,000 in the week ending January 10th.
US Dollar losses were limited however as the Empire Manufacturing index for January climbed from -1.23 to 9.95.
Tomorrow’s US Consumer Price Index is likely to inspire considerable additional movement in the Euro to US Dollar (EUR/USD) exchange rate.
As it stands, the EUR/USD pairing is trading in the region of 1.1630
EUR/USD Exchange Rate Trends around Opening Levels
As trading progressed and the knee jerk reaction to the US retail sales numbers wore off, the Euro to US Dollar (EUR/USD) exchange rate gave up almost all of its previous gains.
Although the sales report was much worse than anticipated, some industry experts are blaming sliding oil costs for the result, and many don’t see the data as damaging enough to prevent a first-quarter hike in borrowing costs from the Federal Reserve.
The Euro to US Dollar (EUR/USD) exchange rate is trading in the region of 1.1791.
EUR/USD Exchange Rate Climbs over 0.3%
The Euro to US Dollar (EUR/USD) exchange rate bounced higher by over 0.3% following the release of US Advance Retail Sales figures.
To the concern of investors and the surprise of economists, US retail sales plummeted by -0.9% on a monthly basis in December.
A decline of -0.1% had been predicted but the actual result raises serious concerns about wage growth in the US and the restrictions it places on consumer spending.
The Euro to US Dollar (EUR/USD) exchange rate achieved a high of 1.1846
After spending much of the week trending in the region of a nine-year low, the Euro to US Dollar (EUR/USD) exchange rate steadied ahead of the publication of the Eurozone’s Industrial Production figures.
Euro to US Dollar (EUR/USD) Exchange Rate Drops 0.2%
However, although the Eurozone’s Industrial Production report was more positive than forecast, the Euro to US Dollar (EUR/USD) exchange rate still shed 0.2% in response to European Central Bank President Mario Draghi’s recent comments regarding the central bank being ready to introduce quantitative easing.
Economists had predicted that industrial production in the currency bloc would stagnate on the month in November.
However, production actually climbed by 0.2%.
The Euro to US Dollar (EUR/USD) exchange rate is trending in the region of 1.1758
Euro to US Dollar (EUR/USD) Exchange Rate Trends in Narrow Range before Industrial Production Data
A number of factors have kept the Euro to US Dollar (EUR/USD) exchange rate trending at multi-year lows recently, from US growth exceeding estimates to the Eurozone entering deflation.
However, the divergence in fiscal policy adopted by the European Central Bank (ECB) and Federal Reserve has had a massive impact on the Euro to US Dollar currency pair.
While economists have forecast that the Federal Reserve could increase interest rates before the middle of the year, the ECB is preparing to loosen policy even further and roll out controversial quantitative easing measures.
The Euro to US Dollar (EUR/USD) exchange rate hit a low of 1.1753
Every negative ecostat from the Eurozone ups the odds of the ECB announcing QE at next week’s policy meeting and puts the Euro under pressure.
Yesterday Germany’s Wholesale Price Index registered another month of declines while the two US reports, JOLTS job applications and NFIB Small Business Optimism, came in above forecast levels.
However, declines in the Euro to US Dollar (EUR/USD) exchange rate were trimmed after a Federal Reserve official insinuated that they aren’t backing borrowing costs being increased in 2015.
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota, who is known for his dovish stance, asserted; ‘Deciding not to reduce stimulus in 2015 would be consistent with a goal-oriented approach to the employment mandate […] increases in stimulus would push upward on employment. […] The job market is, finally, on a highly desirable upward trajectory. We are more likely to continue on that welcome trajectory if the [Fed] does not tighten monetary policy in 2015.’
The Euro to US Dollar (EUR/USD) exchange rate achieved a high of 1.1811
On Wednesday, however, the Euro came under pressure from remarks issued by ECB President Mario Draghi regarding the central bank being ready to roll out quantitative easing.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: Further Declines Ahead?
During the European session the Euro to US Dollar (EUR/USD) exchange rate could extend declines if the Eurozone’s Industrial Production report prints at or below expected levels.
Economists have forecast that industrial production stagnated on the month in November following the previous month’s 0.1% gain.
Industrial production is believed to have fallen by -0.7% on the year.
Additional EUR/USD fluctuations can be expected to follow the release of the US Advance Retail Sales figure.
If sales slid by -0.1% on the month, as projected, the Euro to US Dollar currency pair could trim recent gains.
That being said, the EUR/USD exchange rate is likely to remain trading at multi-year lows until the ECB gathers on the 22nd.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1752
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.8503
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7746
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2907