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Euro to US Dollar (EUR/USD) Exchange Rate Steady on Italian Budget Update

Reports of Italy-EU Budget Compromise Push EUR/USD Exchange Rate Higher

The Euro (EUR) has ticked higher against the US Dollar (USD) today, following the news that Italy might have reached a compromise with the EU over its budget.

The Italian government initially set the cat among the pigeons with its ambitious budget plan, which caused immediate concern because it breached spending limits.

Most recently, Italian officials have reined in their plans by targeting a budget deficit of 2.2% of GDP in 2020 and 2% in 2021, compared to initial 2.4% estimates.

Tensions remain high between Italy and the EU, but for the time being this apparent compromise has reassured Euro traders.

EUR/USD Exchange Rate Gains Limited by Mixed Eurozone Sales Data

The Euro’s (EUR) advance against the US Dollar (USD) today has been limited by Eurozone economic data, specifically the latest retail sales stats for August.

These have revealed above-forecast growth for the annual printing, but a still-negative figure for the month-on-month reading.

The expectation had been for monthly sales growth to rise from -0.6% to 0.2%, but the reading instead printed at -0.2%.

US Dollar to Euro (USD/EUR) Exchange Rate Dips after Fed Chair Rejects Inflation Spike Theory

The US Dollar (USD) has dipped against the Euro (EUR) in trading today, with yesterday’s remarks from the Federal Reserve Chair limiting demand for the US currency.

Fed Chair Jerome Powell gave a broadly optimistic economic outlook, but didn’t anticipate pressure from inflation rates in the future.

The Fed is expected to raise interest rates for a fourth time this year in November or December, but rate hikes in 2019 are less of a certainty.

Higher inflation increases the odds of a future Fed rate hike, so Mr Powell’s forecast for inflation remaining at the Fed’s 2% target has disappointed USD traders.

Euro to US Dollar Exchange Rate Forecast: Will EUR/USD Decline on Rising US Employment?

The next data which could affect the Euro to US Dollar (EUR/USD) exchange rate will come this afternoon and might trigger a US Dollar rise in the pairing.

This will be the ADP employment change figure for September, which is expected to show that more persons found employment in September compared to August.

If the reading rises by or exceeds the anticipated 185k figure then the US Dollar could rise sharply against the Euro.

Despite the risk of a EUR/USD exchange rate decline, however, the Euro may still be able to advance against the US Dollar if today’s later US PMI data prints as forecast.

ISM’s non-manufacturing PMI for September is expected to show a slowdown during the month, with a shift from 58.5 points to 58.

While a minor move, such a result could still lower USD trader confidence and enable a late-in-the-day Euro to US Dollar exchange rate rise.