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Euro to US Dollar (EUR/USD) Exchange Rate Rises despite Falling German Confidence

US Dollar Weakness Enables EUR/USD Exchange Rate Rise Today

The Euro (EUR) has made a small rise against the US Dollar (USD) today, mainly because a disappointing development in the US has raised the appeal of the Euro.

Eurozone news hasn’t been especially supportive today – Ifo measures of German business climate, current conditions and future expectations in June have all fallen.

Summarising this downturn, Ifo President Clemens Fuest said:

‘The tailwind enjoyed by the German economy is calming down.’

Falling levels of confidence can risk a decline in economic activity in Germany, which has the distinction of being the largest economy within the Eurozone.

US Dollar to Euro (USD/EUR) Exchange Rate Drops as Trade War Hits Home

The US Dollar (USD) has made a minor loss against the Euro (EUR) today, in addition to declining against other currency peers.

This poor performance is partly down to a negative trader reaction to the latest development in US international trade.

As a repercussion of President Donald Trump’s trading spat with the EU, Harley Davidson has had to move some business out of the US.

In a statement, the company said:

‘Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe.

‘Europe is a critical market for Harley-Davidson.’

This story is notable because soon after taking office, President Trump declared that he would support the motorcycle company through his trading plans:

‘I just met with officials and workers from … Harley-Davidson.

‘I asked them, how is business? They said that it’s good. I asked them how they are doing with other countries, mainly international sales.

‘They told me that it is very hard to do business with other countries because they tax our goods at such a high rate.

‘I believe strongly in free trade but it also has to be fair trade.’

This development represents a backfire of Mr Trump’s trading policies and could lead to greater USD losses in the future if other companies follow suit.

Euro to US Dollar Exchange Rate Forecast: EUR/USD Volatility Risk on Fed Speeches

The next relevant economic event will come from the US, when Federal Reserve policymakers Raphael Bostic and Robert Kaplan speak on Tuesday evening.

Only Mr Bostic is a voting member of the Fed this year, but both officials could influence the EUR/USD exchange rate with their remarks.

The main focus will be on whether either believes that another US interest rate hike could be coming shortly; there have been two in 2018 so far.

USD traders are predicting four rate hikes total this year, so hints of another imminent hike might be enough to push the US Dollar up against the Euro.