Euro US Dollar (EUR/USD) Exchange Rate Muted amid Lack of Data Releases
The Euro US Dollar (EUR/USD) exchange rate is trading in a mixed capacity today, as a lack of data limits the Euro.
At the time of writing, EUR/USD is trading at around US$1.0865, showing little movement from the morning’s opening rates.
Euro (EUR) Mixed amid Short Supply of Data
The Euro (EUR) is trading in a mixed capacity today, owing to a lack of fresh macroeconomic releases in the Eurozone.
Earlier in the session, European Central Bank (ECB) President Christine Lagarde delivered a speech at the European Banking Congress. However, she shied away from discussing monetary policy and thus brought little in the way of tailwinds for EUR.
Elsewhere, the final Eurozone inflation data printed earlier, reflecting October’s inflation rates. The final print was unchanged from preliminary readings of 2.9%, which confirmed that inflation in the bloc had continued to cool.
Because of this, ECB rate hike bets are likely receding further, which may have contributed additional pressure.
Elsewhere, the market mood is broadly upbeat thus far, which is likely preventing the safer Euro from gaining ground.
However, this is having an impact on the US Dollar as investors look for riskier assets. Due to the pairing holding a negative correlation, this may be bringing some support to the common currency.
US Dollar (USD) Pressured by Risk-On Trade
The US Dollar (USD) is enduring a sell-off today, as investors seek more risky assets amid a jolly market mood.
Risk-on trade has increased over the course of this week’s session, as markets begin to suspect that global borrowing costs have reached their peak.
Inflation appears to have begun to cool to normal levels, which may mean further interest rate hikes are unneeded. As such, optimism over the global economic outlook is increasing, preventing the US Dollar from enjoying safe-haven flows.
Specifically, the Federal Reserve are likely to be at the end of their tightening cycle, due to slowing economic activity and cooling inflation. These pared back Fed hike bets are likely bringing additional headwinds for the ‘Greenback’.
Euro US Dollar Exchange Rate Forecast: FOMC Minutes in Focus
Looking ahead for the US Dollar, the latest Federal Open Market Committee (FOMC) meeting minutes are due for release on Tuesday.
If the Federal Reserve keeps the door propped for a future interest rate hike, USD could strengthen. However, the growing perception is that central banks are at the end of their tightening cycles. If the minutes are unconvincing, USD may be unable to gain ground.
For the Euro, the data calendar is looking quite light at the beginning of the week’s session. Because of this, the Euro could trade within narrow boundaries amid a lack of wider impetus.
Risk appetite is likely to play a significant role in shaping the pairing. If trading conditions sour, the US Dollar could climb above the Euro due to its nature as a safe-haven.