The Euro has remained in an advantageous position against the US Dollar today, trading in the region of 1.1357.
This slight decline from earlier comes after the traders behind Tuesday’s Euro rally reined in their expectations. The Euro initially soared on hopes that the European Central Bank (ECB) could be tightening monetary policy and eventually raising interest rates.
On Wednesday, however, ECB official Vitor Constancio stressed that the situation was ‘business as usual’ by saying;
‘If we want to bring inflation to our target of below but close to 2% then we have to persist in the type of monetary policy that we been adopting’.
(First published 10:31, June 28th, 2017)
The Euro has capitalised on a weakened US Dollar today, rising to its best exchange rate since June 2016 due to low US confidence.
- EUR USD trades at 1.1362 – USD EUR rate drops to 0.8798
- Euro picks up on French confidence stats – Italian inflation misses forecasts
- US Dollar suffers from IMF downgrade – Fed Chair warns of deregulated US market
- Euro volatility possible on confidence stats – US Dollar may crash on GDP drop
Limited Eurozone news today has failed to prevent the EUR USD advance, which has come amid mixed signs of Eurozone stability.
Euro Rises as French Confidence Ticks Up
The Euro has appreciated slightly against the US Dollar today, following the news that French consumer confidence has risen above forecasts in June. Predictions had been for the index to reprint a score of 103 points, but the actual result showed a rise to 108.
Less supportively, today has seen Italian inflation rate figures miss predictions in June. The annual slowdown has been by more than expected, while monthly inflation has remained negative instead of rising as forecast.
US Dollar Dips after IMF Downgrade and Dodd-Frank Fears
The latest US Dollar dip has been triggered by a pair of pessimistic forecasts.
The first came on Tuesday, when the International Monetary Fund (IMF) downgraded its outlook on US growth. This came due to fading confidence in Donald Trump’s ability to implement his much touted economic growth plans.
More recently, Federal Reserve Chair Janet Yellen has also weakened the US Dollar with a cautious outlook. While Yellen has estimated that there won’t be another financial crisis ‘in our lifetimes’, she has also stated that there could be hidden risks associated with repealing the Dodd-Frank act.
This was put in place by the Obama administration, as a way of preventing the US from falling into another financial crisis like that of the late 2000’s.
EUR USD Forecast: Further Euro Gains Possible on Eurozone Confidence Stats
The Euro may extend its current gains against the US Dollar today on a European Central Bank (ECB) event.
ECB officials, including President Mario Draghi, are due to speak in Portugal about central banking.
If the assembled policymakers are optimistic in their outlooks on central banking then the Euro could appreciate, as it could imply monetary policy tightening in the future.
Further ahead, Thursday will open with German confidence data for July. Forecasts are for no initial change in the index, which may have little actual impact. More notable will be later Eurozone-wide confidence scores, which are broadly predicted to show rising confidence across the currency bloc.
While the Euro may appreciate on signs of rising business and economic confidence, later German inflation rate stats are forecast to show a yearly slowdown.
This spread of positively and negatively-predicted data releases may cause Euro fluctuation across Thursday, but the closing German inflation stats could leave the Euro weak against the US Dollar.
Today’s impactful US news will be limited to crude oil stock data for late June.
If the US’s stock of crude oil falls then the US Dollar could rise, as lower stocks can lead to higher oil prices. Such conditions would benefit US oil exporters.
Further ahead, Thursday will bring final US GDP stats for Q1. This data could send the US Dollar tumbling, as the previous GDP estimate of 2.1% is forecast to be revised down to 1.2%.
Current Interbank EUR USD Exchange Rates
At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1362 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8798.