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Euro US Dollar (EUR/USD) Exchange Rate Muted as Eurozone Economic Sentiment Hits Two-Year Low

Euro US Dollar (EUR/USD) Exchange Rate Flat as Eurozone Economic Sentiment Slides to Two-Year Low

The Euro US Dollar (EUR/USD) exchange rate remained flat and the pairing is currently trading at an inter-bank rate of $1.1160.

The Eurozone’s economic confidence fell to a two-year low as sentiment fell for the tenth month in a row.

The figure from the European Commission revealed that managers became increasingly pessimistic about their production expectations.

Added to this, the bloc’s consumer confidence also fell in April which likely further weighed on the single currency.

Euro (EUR) Muted as S&P Leave Italian Credit Rating Unchanged

On Monday, S&P Global left Italy’s sovereign credit rating unchanged, just two places above junk status at BBB.

However, the ratings agency maintained its negative outlook for the third largest economy in the Eurozone, which likely left the single currency flat against the Dollar.

Commenting on the rating, Christoph Rieger, Rate Strategist at Commerzbank said:

‘Some in the market were calling for a ratings cut, which is why foreign investors have been quite cautious in the run up to the S&P decision.

‘But on Friday when the domestic buyers returned there was already quite a bit of recovery, and we are seeing that extended into today.’

US Dollar (USD) Flat despite Surge in US Q1 GDP

On Friday, the preliminary Q1 US GDP rose by a higher-than-forecast 3.2%, the first time since 2015 that Q1 GDP was higher than 3%.

The surge in economic growth was likely due to stockpiling, as the threat of the trade tensions between the US and China caused businesses to stockpile at the fastest rate since 2015.

This helped to ease fears of an imminent recession, as some analysts feared the US economy was heading towards a recession after a slowdown in 2018.

However, some economist forecast that US growth will decelerate over the rest of the year.

Commenting on this, Head of US Equity at Lazard Asset Management, Ronald Temple said:

‘While the headline US GDP number was much stronger than expected, the components that measure domestic demand were weak. Specifically, growth in real final sales to private domestic purchasers was only 1.3% versus 3.1% in 2018.

‘Looking beyond the first quarter, I continue to expect growth to decelerate from 2018, but still remain above 2% for the full year.’

Euro US Dollar Outlook: Will the EUR/USD Exchange Rate Slide on Disappointing Eurozone GDP?

Looking ahead to Tuesday, the Euro (EUR) could slide against the US Dollar (USD) following the release of the Eurozone’s preliminary Q1 2019 GDP.

If GDP in the first quarter is lower than forecast, the single currency may slide against the ‘Greenback’.

In the afternoon, the US Dollar could rise against the Euro following the release of the Chicago Purchasing Manager’s Index.

If April’s PMI rises higher than forecast, it could provide the Dollar with an upswing in support and the Euro US Dollar (EUR/USD) exchange rate could fall.