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Euro US Dollar (EUR/USD) Exchange Rate Climbs Ahead of ECB Rate Decision

ECB Rate Decision Imminent – What can we expect for the Euro US Dollar (EUR/USD) Exchange Rate?

The Euro US Dollar (EUR/USD) exchange rate climbed on Thursday, reversing yesterday’s brief fall after US Fed Chairman Jerome Powell stressed than an inflation overshoot will be allowed.

Investors are now turning their attention to the European Central Bank (ECB) rate decision, with many questioning whether the ECB will refrain from putting a concrete end-date on QE, or instead announce that it will be extended beyond September this year.

Given the disappointing performance of data from the bloc in Q2 this year – yesterday’s weak industrial production and employment figures for instance – investors are now leaning towards the latter, with the central bank liable to maintain quantitative easing methods until the economy seems strong enough to warrant their removal.

USD Exchange Rates Struggle on Fresh US-China Trade Concerns

The US Dollar (USD) saw a small jump yesterday when the US Federal Reserve raised its baseline interest rate, but its climb was cut short by a round of profit taking and fresh concerns regarding US –China trade relations.

The Trump administration is set to release its final list of Chinese products that will be subject to 25% tariffs by Friday, with the US President reasserting vows to pursue aggressive trade action in the coming weeks against China.

‘China could be a little bit upset about trade because we are very strongly clamping down’, the President told Fox News in an interview yesterday, flummoxing investors that had hoped that fruitful negotiations would remove the need for more tariff threats.

This news siphoned demand away from the ‘Greenback’ once more, with bearishness ahead of the ECB rate decision also keeping the US Dollar down.

Euro US Dollar (EUR/USD) Exchange Rate Forecast: US Retail Sales Looming

The outlook for the Euro US Dollar (EUR/USD) exchange rate is currently rather mixed, with the imminent rate decision liable to make or break demand depending on the revealed sentiment of the central bank.

Beyond the rate decision, however, investors will also have the US retail sales figures for May to contend with, with the forecast rise in retail sales capable of putting EUR/USD under pressure.

In the medium term; investors currently hold the US economy in very high regard, and given claims that the central bank is aiming for 2 more rate rises this year, we could see the ‘Greenback’ climb in the coming months.