Increased Inflation Pressure on the ECB Pushes EUR/USD Exchange Rate Higher
This appreciation has been caused by the news that year-on-year Eurozone inflation rates have risen in July.
Most notably, the base rate of inflation has hit 2.1%, above the European Central Bank’s (ECB) target range of ‘below, but close to, 2%.’
This puts more pressure on ECB policymakers to raise interest rates early in 2019 rather than later; the bank last adjusted rates by cutting them to 0% in 2016.
The monthly Eurozone inflation rate reading wasn’t quite so supportive of the single currency – this showed a slowdown from 0.1% to -0.3%.
Annual data is usually considered more high-impact than monthly readings, but this month-on-month dip has still limited today’s EUR/USD exchange rate gains.
Turkish Emergency Measures Reassure Traders and Push EUR/USD Exchange Rate Up
In addition to this morning’s inflation rate data, the Euro to US Dollar (EUR/USD) exchange rate has also risen because of the latest developments in Turkey.
Turkish Finance Minister Berat Albayrak addressed thousands of investors on Thursday and for the most part reassured them about future national stability.
Mr Albayrak did not advocate raising Turkish interest rates but still pledged to lower the inflation rate from its current 15%.
For context, Euro traders were worried last week that a Turkish economic crash could harm Eurozone banks that had invested in Turkey.
As such, with the Turkish Lira appreciating after Mr Albayrak’s remarks, the Euro has also risen because of widespread trader reassurance.
US Dollar to Euro (USD/EUR) Exchange Rate Dips after US-China Trade Talks Announced
The US Dollar (USD) has slipped against the Euro (EUR) today, as traders process the news that US and Chinese officials will meet to discuss trade tariffs.
The meeting in late August could bring a resolution to the steadily escalating US-China trade spat, but the lack of US Dollar movement today suggests scepticism.
Continuing dialogue is seen as good news, but as these talks are being labelled as ‘low-level’, it remains to be seen whether they will ultimately bear fruit.
Euro to US Dollar Exchange Rate Forecast: Will Rising US Consumer Confidence Cause EUR/USD Decline?
While the Euro (EUR) has advanced against the US Dollar (USD) today, these gains could turn to losses this afternoon after US confidence data is released.
The University of Michigan consumer confidence estimate for August is tipped to show a slight increase in levels of optimism, with a rise from 97.9 points to 98.
While this would be a minimal increase, it could still raise US Dollar demand because from June to July, the reading fell from 98.2 points to 97.9.
Getting back to Eurozone news, the next data to watch out for will be Monday’s construction output reading for June.
The year-on-year printing is tipped to rise sharply from 1.8% to 4.5%, which might cause early-week Euro to US Dollar exchange rate gains.