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Euro US Dollar (EUR/USD) Exchange Rate Trading Narrowly in Wake of ECB Minutes

EUR/USD Exchange Rate on Hold as ECB Frets over the Euro

The Euro US Dollar (EUR/USD) exchange rate is showing limited movement this morning as investors continue to reflect on the minutes from the European Central Bank’s (ECB) latest policy meeting.

At the time of writing EUR/USD largely unmoved from this morning’s opening levels, but is still on track to end the week’s session higher.

Euro (EUR) Subdued as ECB Concerned by the Strength of the Single Currency

The Euro continues to face pressure this morning, limiting its attempts to advance against the US Dollar as the focus remains on yesterday’s ECB minutes.

The main take away from the minutes appears to be the ECB’s concerns over the recent movement in currency markets and the rapid rise in the strength of the single currency.

Policymakers suggest that this will hamper the bank’s attempts to lift inflation.

The minutes read;

‘It was remarked that the recent movements in the euro exchange rate seemed to relate more to the relative monetary policy shocks, including communication, and less to improvements in the macroeconomic outlook.

This suggested that the exchange rate appreciation could be expected to have a more negative impact on inflation.’

US Dollar (USD) Muted Despite Easing of Geopolitical Tensions

At the same time the US Dollar is also struggling to find any gains this morning despite recent fears over a possible escalation of tensions in the Middle East appearing to fade.

Tensions were running high earlier this week as US President Donald Trump promised a quick and ‘forceful response’ to an alleged chemical weapon attack by the Syrian government.

This culminated in Trump tweeting that Russian should prepare for a US missile strike against its Syrian allies, with the rising tensions prompting markets to shun USD.

While the US Dollar was able to recoup some of these losses on Thursday as Trump appeared to strike a more diplomatic tone, the currency is struggling a little today as markets remain wary of tensions flaring once again.

David Madden, market analyst at CMC Markets UK said;

‘President Trump’s rhetoric in relation to Syria has dialled down and this has removed some of the fear in the market, but as the situation is yet to be resolved, investors aren’t particularly optimistic.’

EUR/USD Forecast: Will Robust US Confidence Figures Bolster USD?

Looking ahead the EUR/USD exchange rate could find itself on the back foot later this afternoon following the release of the latest US consumer confidence figures.

This month’s University of Michigan’s consumer sentiment index is expected to hold relatively close to the 14-year high struck in March.

Alongside expectations of another solid print for job openings this may see the US Dollar trend higher towards the end of the European session.

Meanwhile the focus for EUR investors will turn to next week’s data, with the Euro likely to be met by losses if Germany’s economic sentiment index drops into negative territory in April as forecast.