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Euro to US Dollar (EUR/USD) Exchange Rate Predicted to Edge Higher on Below-Forecast US Advance Retail Sales Growth

EUR/USD Conversion Rate Forecast to Tick Higher after Italian Unemployment Dropped Beyond Expectations

The Euro to US Dollar (EUR/USD) exchange rate edged fractionally higher by around 0.2% on Friday afternoon.

European economic data produced mostly positive results today which saw the single currency halt losses and rack up moderate daily gains versus its rivals. The final figures for November’s German Consumer Price Index met with expectations of 0.4% on the year and 0.1% on the month. In addition, German EU-Harmonised inflation matched forecasts. Also aiding demand for the Euro was third-quarter seasonally-adjusted Italian Unemployment which dropped lower than the market consensus of 11.9%, with the actual figure falling to 11.7%.

Analysts at Westpac believe that the Euro has seen its lows for the year, stating: ‘Last week’s ECB disappointment will have many scrambling to revise their projections around how large the Fed-ECB policy differential can grow, removing a major downside risk for EUR. Likely dovish guidance by Chair Yellen next week likely exacerbates that story. EUR has probably seen its lows for the year though would favour selling 1.10/1.11 regardless of the timing – pricing for a follow up Fed hike is extremely complacent.’

The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0970.

USD/EUR Exchange Rate Predicted to Hold Losses ahead of US Consumer Confidence Report

After Advance Retail Sales failed to meet with the median market forecast 0.3% growth in November, the US Dollar edged lower versus some of its peers. The depreciation has been moderate, however, as the 0.2% growth registered was still the fastest acceleration for four-months. Although the Federal Reserve has stated that policy decisions will be data-centric this report is unlikely to have a huge impact on policymaker decisions.

‘The trend in consumer spending is still pretty strong,’ Jim O’Sullivan, chief US economist at High Frequency Economics Ltd., said before the retail sales report. ‘It’s being helped by good wage income growth and the boost in spending power from declining gasoline prices.’

The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.0925 during Friday’s European session.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Trend Narrowly ahead of Fed Rate Decision

Although there will be a number of influential economic data publications ahead of Wednesday’s Federal Reserve interest rate decision, there is a high likelihood that the EUR/USD exchange rate will continue to trend in the region of 1.09. This is because traders have now settled on an appropriate level for the Euro and have already priced-in the likelihood of a Fed benchmark rate increase. With that being said, however, any particularly surprising data results from either Europe or the US could provoke volatility. Later today the University of Michigan Confidence report has the potential to stimulate US Dollar changes.

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