Third Quarter German GDP Misses Forecast to Extend EUR/USD Exchange Rate Downtrend
Fed Chair Janet Yellen failed to provide particular support for the probability of a December rate hike, leaving the US Dollar (USD) a little softer overnight. Nevertheless, the Euro (EUR) has been hit by more negative news this morning as the third quarter GDP results of Germany have proved somewhat weaker than hoped, with indications pointing to a more dovish result on the overall Eurozone measure later today. Consequently the EUR/USD exchange rate has remained in a strong slow on Friday.
After European Central Bank (ECB) President Mario Draghi reiterated the downside risks to the common currency (EUR) this morning the EUR/USD exchange rate has entered a severe slump.
Euro Currency News: EUR Softened by Greek Bailout Delays and Portuguese Parliamentary Shake-up
In spite of an unexpectedly strong widening of the German trade surplus and improved Sentix Investor Confidence reading earlier in the week, the common currency (EUR) has struggled to make any particular gains. After Eurogroup finance ministers declined to approve the latest tranche of Greek bailout funds traders were generally discouraged, with fears rising that the Hellenic nation’s third bailout program might not prove sustainable. The recent ousting of Portugal’s centre-right government by an anti-austerity coalition of left-wing parties also did little to encourage positive Euro sentiment.
Although pundits remain fairly confident that the odds are in favour of the Federal Open Market Committee (FOMC) opting to raise interest rates in December the US Dollar (USD) has been pushed down this week by overvaluation concerns. While the ‘Greenback’ did strengthen on the back of Tuesday’s larger-than-expected Wholesale Inventories figure a more bearish Mortgage Applications reading helped the EUR/USD exchange rate trend higher.
European Central Bank (ECB) President Talks Down Euro (EUR) Today with Odds of Fresh Monetary Loosening
However, the EUR/USD pairing has resumed a downtrend on Thursday morning as a general strike brings Greece to a standstill. Workers are protesting the bailout terms agreed by Prime Minister Alexis Tsipras during the Grexit crisis, putting additional pressure on the continuing negotiations over the country’s foreclosure laws.
The Euro has also been prompted to trend lowered as European Central Bank (ECB) President Mario Draghi made comments to the European Parliament, highlighting the downside risks that threaten the single currency. As this was followed up by a reiteration that the central bank could resort to expanding its quantitative easing program the single currency entered a strong downturn, with the EUR/USD exchange rate consequently slumping to a seven-month low of 1.0689.
EUR/USD Exchange Rate Forecast: Volatility Predicted on Upcoming Eurozone GDP and US Advance Retail Sales Figures
A rally may be in store for the Euro ahead of the weekend, though, with the publication of the third quarter German and Eurozone Gross Domestic Product reports. Expectations point to an uptick in both measures on the year, something that could still offer reassurance to traders in spite of recent turbulence within the currency union.
Tomorrow is also likely to provoke further volatility for the US Dollar as both the October Advance Retail Sales and the University of Michigan Confidence Index for November are set for release. Pundits are anticipating a strong showing here, which would certainly shore up the ‘Buck’ with fresh support for an imminent Fed rate hike.
Current EUR, USD Exchange Rates
At time of writing, the Euro to US Dollar (EUR/USD) exchange rate was slumping sharply in the range of 1.0715, while the US Dollar to Euro (USD/EUR) pairing was making bullish gains in the region of 0.9331.