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Euro to US Dollar Exchange Rate Kept Under Pressure Ahead of European Central Bank

Euro to US Dollar Exchange Rate Lacks Fresh Support after Today’s Data

The Euro to US Dollar (EUR/USD) exchange rate has been unable to hold its ground after last week’s tumble. There may be further losses ahead amid upcoming European Central Bank (ECB) news, despite the Eurozone’s fairly strong overall outlook.

After opening at the level of 1.1905 last week, EUR/USD kept climbing until it touched on the key level of 1.2000. This was the best level for the pair in over two years, since 2018.

Investors took profit from these highs and EUR/USD ultimately ended the week over a cent and a half lower, in the region of 1.1838.

Since markets opened this week, EUR/USD has been trending slightly lower again. EUR/USD is trending in the region of 1.1822 at the time of writing.

The biggest focus for Euro to US Dollar exchange rate investors this week will be the European Central Bank’s September policy decision, set for Thursday.

Euro (EUR) Exchange Rates Kept Pressured by Weak Data Ahead of ECB

Last week, the broadly strong Euro (EUR) was sold en masse in profit taking. Investors sold the currency after it hit its best levels against the US Dollar (USD).

However, the Euro has continued to tumble since markets opened this week. So far this week, Eurozone data has been fairly underwhelming, not giving investors much reason to return to the shared currency.

German industrial production from July came in well short of expectations, at 1.2%. According to Valeria Bednarik, Chief Analyst at FXStreet:

‘Germany published July Industrial Production, which advanced 1.2% in the month, worse than the 4.8% expected. It was worse when compared to a year earlier, as it declined 10% against a 12.1% advance expected. Given the holidays, the macroeconomic calendar will remain empty for the rest of the day.’

This, as well as concerns that the European Central Bank (ECB) will talk down the Euro’s strength in its upcoming policy decision, left the Euro pressured as investors await the ECB later in the week.

US Dollar (USD) Exchange Rates Steady amid Labor Day Holiday

Investors had little reason to move on the US Dollar today, as US markets were closed to observe the Labor Day public holiday.

The US Dollar did maintain some of the bullishness it saw last week however.

After being hit slightly by underwhelming US Non-Farm Payroll data at the end of last week, the US Dollar resumed its advances today. The US Dollar has been rebounding from its cheapest levels in profit-taking since last week.

As well as continued recovery attempts, the US Dollar is also benefitting from today’s Euro weakness. This is because the Euro and US Dollar are rival currencies that often see negative correlation.

Euro to US Dollar (EUR/USD) Exchange Rate Awaits European Central Bank (ECB)

The Euro to US Dollar exchange rate has the potential to keep falling.

Analysts increasingly expect the European Central Bank (ECB) will criticise the strength of the Euro at its upcoming policy decision this week.

As a result, investors may be hesitant to buy the Euro even if tomorrow’s Eurozone data beats forecasts.

Tuesday’s European session will see the publication of Eurozone Gross Domestic Product (GDP) growth rate data from Q2. Unless the data is surprising and better than forecasts though, it is unlikely to have much of an impact on the Euro.

German trade data and Eurozone employment stats will also be closely watched tomorrow, though the focus will remain on the ECB until Thursday’s policy decision.

Continued US Dollar rebound attempts could also keep pressure on the Euro to US Dollar (EUR/USD) exchange rate in the coming sessions.