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Euro to US Dollar Exchange Rate Slips Back from Month-Best on Fresh Brexit Uncertainties

Euro to US Dollar Exchange Rate Driven by Global News amid Lack of Data

After holding its ground for much of yesterday’s session, the Euro to US Dollar (EUR/USD) exchange rate slipped last night as Brexit uncertainty weighed on the Euro (EUR). The pair’s losses have been modest though and a recovery is possible in the coming days.

Following last week’s impressive EUR/USD gains from 1.1039 to 1.1170, this week’s movements have been much narrower so far.

EUR/USD held its ground yesterday and briefly touched on a post-August best of 1.1177. However, the pair is slipping lower today and trends near the level of 1.1144 at the time of writing.

Political news is influencing the Euro to US Dollar exchange rate, but data could drive movement more later in the week.

Euro (EUR) Exchange Rate Weakened on Fresh Brexit Uncertainties

Demand for the Euro has been driven by Brexit news this week so far, amid a lack of influential Eurozone data or news. As the Brexit process is likely to impact the Eurozone as well, the Euro is often affected by Brexit developments alongside the Pound (GBP).

On Monday, UK House Speaker John Bercow decided that the government could not hold another meaningful vote on its Brexit plan that day.

This was because it would be a repeat of Saturday, when parliament decided not to hold a meaningful vote following the Letwin amendment passing.

The meaningful vote being blocked meant that the chances of a deal being secured by the 31st had dampened, making another delay more likely. Still, amid hopes that the government’s deal would pass eventually, the Euro’s losses were limited.

US Dollar (USD) Exchange Rates Steady on US-China Trade Hopes

The US Dollar (USD) has seen weaker performance in recent weeks, amid rising signs that the US economy is weakening and could even fall into recession in the coming years.

This has also led to higher Federal Reserve interest rate cut bets, with many investors betting on another rate cut as soon as next week’s October policy decision.

The US Dollar held its ground a little better today, though it was more due to global factors.

Hopes for the US and China to reach a trade deal in the coming months have risen this week, which is bolstering the US Dollar due to the US economy being impacted by the ongoing US-China trade war.

According to Ray Attrill, Head of Foreign-Exchange Strategy at National Australia Bank:

‘Fuelling the positive mood music have been comments from President (Donald) Trump’s chief economic adviser Larry Kudlow saying that while down to Trump, he sees the possibility of taking off the threatened December tariff increases, as China requested, if the trade talks go well’

Euro to US Dollar (EUR/USD) Exchange Rate Could Resume Advance on Brexit Developments

The Eurozone and US economic calendars will be relatively quiet over the coming day, save for French business confidence and Eurozone consumer confidence tomorrow.

As a result, developments in Brexit and US-China trade relations will likely continue to drive Euro to US Dollar (EUR/USD) exchange rate movement for now.

The UK government plans to hold a parliament vote over the Brexit withdrawal agreement today, after which it could have another meaningful vote on its Brexit plan.

If the withdrawal agreement is blocked, the Euro could weaken as Brexit uncertainties would rise on expectations of a fresh delay.

Meanwhile, the US Dollar continues to be weighed by speculation that the Federal Reserve will cut US interest rates next week, but optimistic US-China trade developments could strengthen the Dollar and push the Euro to US Dollar (EUR/USD) exchange rate lower.