EUR/USD Exchange Rate Muted as Markets Look to ECB Forum for More Guidance on Bank’s QE Tapering
The Euro US Dollar (EUR/USD) exchange rate is trending in a narrow range at the start of this week’s session as markets wait the start of a three-day ECB forum later today.
At the time of writing the EUR/USD exchange rate is virtually unchanged from this morning’s opening levels, but remains over two cents short of last week’s best levels.
Euro US Dollar (EUR/USD) Exchange Rate Stable ahead of ECB Forum
The Euro (EUR) is holding steady against the US Dollar (USD) this morning, ahead of a three-day European Central Bank (ECB) forum kicking off later today in Sintra, Portugal.
The forum is expected to see policymakers discuss their decision to wind down the ECB’s quantitative easing programme by the end of the year, with policymakers are likely to be quizzed on their decision to undertake this at a time when the Eurozone appears to be slowing.
Also likely to be discussed is the ECB’s pledge to keep interest rates on hold until ‘at least summer 2019’, something which prompted a considerable sell-off of the Euro last week.
ECB President, Mario Draghi and ECB Chief Economist, Peter Praet will speak throughout the event, with their remarks likely to have the greatest impact on the EUR exchange rate.
Gains in US Dollar (USD) Exchange Rate Limited by Trade Tensions
At the same time the US Dollar (USD) is struggling to make any real headway against the Euro (EUR) this morning as markets remain concerned by trade tensions between the US and China.
While observers are optimistic that the two sides will avoid escalating things into a trade war, markets remain cautious.
Yukio Ishizuki, senior currency strategist at Daiwa Securities, said:
‘A further escalation of U.S.-China trade tensions is of course a risk scenario. But the current tariffs, even if implemented, will hardly dent the global economy and the market also has to ponder about a scenario in which the two countries try to defuse tensions.’
Trump announced on Friday that he would be pushing forward with his plans to implement tariffs on $50bn worth of Chinese goods, with Beijing swiftly responding with the announcement of its own tariffs on a range of US exports.
EUR/USD Exchange Rate Forecast: Eurozone PMI Data to Undermine the Euro?
Looking ahead to later in the week, the EUR/USD exchange rate could see considerable movement with the publication of the Eurozone’s latest PMI figures.
Economists currently forecast the preliminary figures will reveal that private sector activity fell again this month, likely prompting a downturn in the Euro as it provides further evidence that the Eurozone is slowing down this year.
Meanwhile the US Dollar may trend higher in the middle of the week with the release of the latest US housing figures, with an uptick in US house dales likely to reflect well on USD.