- Euro US Dollar 2016 Exchange Rate in Region of 1.04 – Struggles to break 1.05 level
- US Consumer Confidence Results Boost USD – But EUR USD flat in lighter trade
- EUR Forecast: German Data Due Next Week – Little movement expected this week
- USD Forecast: US Advance Goods Trade Due Thursday – 2017 excitement could bolster USD
Euro US Dollar 2016 Exchange Rate Edges Higher as US Data Disappoints
The Euro US Dollar 2016 exchange rate successfully emerged from its weekly lows and began to edge above the week’s opening levels on Thursday afternoon.
As traders continued to sell the US Dollar from its highs, its selloff was extended by some underwhelming US ecostats published during Thursday’s American session.
November’s advance goods trade balance figures widened from -US$61.9b to -US$65.3b while the number of continuing jobless claims in the US worsened from 2,039k to 2,102k.
EUR USD may fall on Friday however as investors look ahead to 2017 during the last trade day of 2016.
(Previously updated 12:38 GMT 29/12/2016)
Demand for the Euro improved on Thursday morning as the US Dollar was sold from its highs after failing to drag the Euro US Dollar 2016 exchange rate down to fresh yearly lows.
In early afternoon trade, EUR USD trended near the week’s opening levels of 1.04 once again after recovering from a low of 1.03.
The day’s Eurozone M3 results beat expectations with results of 4.8%, but it is unlikely these figures offered the Euro significant support. Instead, a profit-taking and corrective selloff of the US Dollar looks to be the primary reason for the day’s movement.
This could change in the afternoon if November’s US advance goods trade balance results impress investors and strengthen the US Dollar.
(Previously updated 16:33 GMT 28/12/2016)
Euro US Dollar 2016 Exchange Rate Falls to 1.03
With only a few days left of the year left to go, the Euro US Dollar 2016 exchange rate fell within a close region of its worst yearly levels once again on Wednesday afternoon.
After trending sturdily for much of the week thus far, EUR USD plunged over half a cent on Wednesday afternoon to hit a lot of 1.03. The pair last hit this low on the 20th of December which also marked the exchange rate’s worst level since 2003.
The reason for the fall appeared to be ongoing concerns about the Italian banking crisis, as well as expectations that a strong year was ahead for the US Dollar.
If EUR USD doesn’t recover in the coming days, it could begin what is predicted to be a bearish 2017 at its worst levels in over a decade.
(Published 10:37 GMT 28/12/2016)
The Euro US Dollar 2016 exchange rate has fluctuated in light trade this week as many markets around the world see quieter trade amid the late-2016 holiday period.
As 2017 draws near, the pressure on EUR USD is sure to mount. The exchange rate may struggle to reach the level of 1.05 due to the excitement of potential 2017 reflation in the US. This could see EUR USD fall back to 1.03 – its lowest levels in a decade.
Euro (EUR) Limp on Lack of Fresh Supportive Factors
Demand for the Euro has been light since last week. Many markets throughout the Eurozone were closed on Monday to observe the Christmas bank holiday and trade continued to be quiet on Tuesday.
This week’s session is generally lacking in influential Eurozone ecostats, leaving the shared currency to react to other recent political and economic news from the bloc.
The Euro was given a slight boost towards the end of last week by news that the Italian bank Monte dei Paschi had been offered a government bailout to prevent the bank from collapsing in a perceived banking crisis.
However, it was revealed on Tuesday that the European Central Bank (ECB) had advised the bank that the cost of rescuing it would be even higher than expected.
Monte dei Paschi had initially attempted to raise €5b itself, but according to an ECB letter this would not have been enough.
Due to stress tests that the bank had failed over the summer, the amount needed to bail out Monte dei Paschi would be closer to €8.8b.
The Euro was weakened this week by ongoing concerns over the bank’s health, including a statement from ECB official Jens Weidmann suggesting the government bailout wasn’t a done deal;
‘For the measures planned by the Italian government the bank has to be financially healthy at its core. The money cannot be used to cover losses that are already expected. All this must be carefully examined.’
US Dollar (USD) Bolstered by December’s US Consumer Confidence
Demand for the US Dollar has been weaker since last week, as some analysts perceived the market’s Trump and Fed rallies as having been overdone.
This allowed EUR USD to recover slightly, but as US data has remained strong this week and 2017 draws closer, excitement and hawkish optimism continues to surround the US Dollar.
Investors were also impressed by December’s US consumer confidence report, which improved from 109.4 to 113.7 despite being expected to slip to 109.0. The results added to this week’s US Dollar support.
The most significant mid-term supporting factor is the expectation that US economic activity and inflation will see a boost under the incoming Trump administration.
A hawkish Federal Reserve forecasting as many as three US interest rate hikes throughout 2017 has also given the US Dollar some longer-term support.
Euro US Dollar 2016 Exchange Rate Forecast: Bearish Outlook Expected for 2017
While the US Dollar is currently considered overbought by many analysts, traders are sure to continue piling into the ‘Greenback’ in 2017 if things unfold as hawks hope they will.
Higher US inflation and more Fed interest rate hikes throughout the year would certainly bolster USD demand throughout. This could easily take the Euro US Dollar 2016 exchange rate to lows not seen since 2002 or even lower.
However, this of course depends on economic developments. If Trump’s reflationary plans don’t have the desired effect or if the economy struggles in another aspect, EUR USD could see significant gains in the mid to long-term.
In the shorter term things look quieter. Thursday will see the publication of November’s US advance goods trade balance results as well as the latest US jobless claims figures.
Then in early January, German unemployment and inflation stats for December will be published as well as ISM’s December PMIs for the US.
Late-January will of course see the inauguration of US President-elect Donald Trump, which is likely to be the next major market event and could cause another currency movement similar to the USD Trump rally seen in November.
EUR USD Interbank Rate
The Euro US Dollar 2016 exchange rate trended in the region of 1.04 at the time of writing, while the US Dollar Euro exchange rate traded at around 0.95.