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Euro to US Dollar (EUR/USD) exchange rate forecast to weaken throughout the week

The Euro to US Dollar exchange rate fell after the European Central Bank policy maker Jens Weidemann hinted that the Central Bank may be open to the prospect of implementing negative interest rates.

The Euro spent much of the session in a downward trajectory as data released early on weighed upon the single currency. The weakening of business confidence in Germany as a result of the ongoing crisis in Ukraine and the standoff between the West and Russia saw German businesses fret over the impact of sanctions on economic growth.

The Euro received a further knock from remarks made by ECB policy member and Bundesbank President Jens Weidmann who said that negative interest rates would be a better way to counter the high exchange rate of the Euro. He added that the ECB hasn’t ruled out the prospect to buy bank assets in order to tackle the threat of low inflation.

“All the comments are a pre-emptive move by ECB officials to prevent a rapid appreciation beyond the $1.40 range. It suggests that they are concerned about the Euro but there is no consensus but future policy future,”

The US Dollar saw movement following the release of economic data which showed that the number of new homes sold in the US fell to its lowest level in five-months last month, suggesting that the world’s largest economy is struggling to recover from the harsh winter weather conditions which impacted it so heavily at the start of the year.

Countering that negative news somewhat was a separate report which showed that consumer confidence in the nation rose more than expected.

The Conference Board’s Consumer Confidence Index leapt to 82.3 in March, beating February’s figure of 78.3.

The main mover for the Euro on Wednesday will be Germany’s consumer confidence report. A fall in that figure will likely soften the single currency further against the US Dollar. Other data for release is Italy’s consumer confidence reports and retail sales data.

Euro (EUR) Exchange Rates

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3794 ,
Euro,,British Pound,0.8344 ,
Euro,,Australian Dollar,1.5085 ,
Euro,,Canadian Dollar,1.5407 ,

As of 15:00 pm GMT