US Dollar Currency News: USD Bullish after Higher US Consumer Confidence Figure
A stronger-than-expected US Consumer Confidence figure for January, which printed at 98.1 rather than 96.5, has bolstered the US Dollar (USD) ahead of tonight’s Federal Open Market Committee (FOMC) policy decision. Although the latest German GfK Consumer Confidence Survey showed no change on the month this has left the Euro to US Dollar (EUR/USD) exchange rate on a downtrend around 1.0855 this morning.
With markets back in a state of risk aversion the Euro to US Dollar (EUR/USD) exchange rate has nevertheless returned to a downtrend on Tuesday morning.
Euro (EUR) Exchange Rate Strengthened in spite of Dovish Draghi Comments and Weaker German Business Sentiment
Having lost some of its bullishness on the back of comments from European Central Bank (ECB) President Mario Draghi, the Euro to US Dollar (EUR/USD) exchange rate nevertheless began to regain ground on Monday. Investors remain somewhat sceptical of Draghi’s willingness and ability to implement further monetary loosening measures following the more limited-than-expected nature of December’s policy announcement.
Despite weaker German IFO Business Sentiment Survey data suggesting an increasing dovishness within the Eurozone’s powerhouse economy, the Euro (EUR) continued to make gains across the board.
The appeal of the US Dollar (USD) was dented as a result of the extreme weather conditions afflicting the East Coast, which could potentially have a negative impact on productivity as high levels of snowfall paralyse the local economy. Pundits were equally discouraged as the latest Dallas Fed Manufacturing Activity report fell markedly short of forecast, printing at -34.6 rather than the modest improvement to -14.5 that had been anticipated.
Fresh Stock Market Volatility Shores up Demand for Euro (EUR), US Dollar (USD) Today
After two days of modest improvement, global stock markets have returned to bearish form this morning, with the Shanghai Composite Index shedding more than 6% as the recent wave of optimism abruptly fizzled out. Leading the downtrend was Brent crude, which broke back below $30 overnight as record Iraqi production indicated that the current supply glut was unlikely to ease any time soon. This particularly seems to be the case as members of OPEC remain generally resistant to imposing restrictions on pumping activity in order to maintain market share. Safe-haven demand has consequently helped to shore up the single currency and the ‘Greenback’ as traders remain wary of the Chinese economic slowdown.
EUR/USD Exchange Rate Forecast: FOMC Policy Meeting to Weigh on Appeal of US Dollar
Later today the US Dollar will be looking to rally further with January’s Consumer Confidence figure, with a stronger showing likely to shore up demand for the ‘Buck’ as an improvement in domestic sentiment would outweigh the negative impact of recent market volatility. However, if consumers show signs of increasing pessimism, the outlook of the world’s largest economy could remain more muted.
Ahead of tomorrow’s Federal Open Market Committee (FOMC) policy meeting the EUR/USD exchange rate can be expected to strengthen, as policymakers are unlikely to adopt a particularly hawkish tone at this juncture. Should the Fed continue to stress a slower pace of interest rate hikes the US Dollar is predicted to soften against rivals.
Current EUR, USD Exchange Rates
At the time of writing, the Euro to US Dollar (EUR/USD) exchange rate was trending lower at 1.0838, while the US Dollar to Euro (USD/EUR) pairing was on an uptrend at 0.9223.