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Euro to US Dollar Exchange Rate Forecast: US GDP Data sends EUR/USD to 8-Week High, EUR/CAD at 2-Week High

Euro Exchange Rates Today

The Euro to US Dollar (EUR/USD) exchange rate strengthened by more than 1.70% on Wednesday as positive German inflation data buoyed the single currency and a weaker-than-forecast US GDP report weakened the ‘Greenback’.

The Euro to US Dollar (EUR/USD) Exchange Rate Soared To A Session High of 1.1178

Eurozone Deflation Fears Ease

Signs that the European Central Banks €1 trillion quantitative easing programmes aim of pushing up inflation is working sent the Euro climbing against many of its major peers. Data out of Belgium showed that consumer prices increased for the first time in six months in April. According to Statistics Belgium, the nation’s consumer price index rose 0.29% on a year-on-year basis to reverse the 0.40% decline seen in March. Excluding energy, inflation accelerated to 1.16 percent in April from 0.85 percent in the preceding month. Food inflation also climbed to 0.60 percent from 0.03 percent. Month-on-month, inflation rose by 0.38%.

Germany saw consumer prices rises too. According to the German Federal Statistics Bureau, consumer price inflation in the Eurozone’s largest economy increased at an annualised rate of 0.4%. The figure met forecasts and was an improvement on the preceding month’s level of 0.3%. Month-on-month prices were shown to have dipped by 0.1%.

Economists are now expecting Thursday’s Eurozone inflation data to show signs of improvement.

US GDP Data Hammers the US Dollar Exchange Rate

The US Dollar tumbled against the Euro and fell against most other major peers after data released by the Washington based Commerce Department showed that the world’s largest economy expanded at a far slower pace than forecast in the first quarter of 2015.

According to the data, GDP expanded by just 0.2%, well below the 1% figure forecast and worse than the previous quarter’s growth rate of 2.2%. Harsh winter weather was blamed for the economy’s poor performance.

Despite the poor data, many economists believe that the US economy will grow far more strongly in the second quarter as the weather improves.

‘Our working assumption is that this quarter, like previous first quarters will be the year’s low point and the economy should accelerate from here. Admittedly the data does not yet support the type of snapback seen in 2014 but more growth s better than less and we expect that to occur this year,’ said Dan Greenhaus, chief strategist at BTIG.

The US Dollar is forecast to weaken further as investors turn their attention to the upcoming Federal Reserve policy statement. The US central bank is expected to leave interest rates unchanged at 0.25%.

Following the poor GDP figures many economists are expecting Fed policy makers to deliver a dovish statement alongside the rate decision.

The Euro to Canadian Dollar (EUR/CAD) Exchange Rate Hit A Session High of 1.3362

The Euro strengthened by more than 1% against the Canadian Dollar after the Canadian currency came under pressure from a dip in oil prices and data which showed that raw material prices in the nation fell 0.9% last month. The fall was less than the 1.8% drop forecast.

Oil prices eased after King Salman of Saudi Arabia altered the kingdom’s line of royal succession in a reshuffle that affected the leadership of the nation’s oil company, Saudi Aramco. Saudi reshuffles often affect oil prices as stability in the world’s largest oil exporter is seen as vital to maintain global supplies.