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Euro US Dollar (EUR/USD) Exchange Rate Treading Water Ahead of ECB Rate Decision

EUR/USD Exchange Rate Steady as ECB in Focus

The Euro US Dollar (EUR/USD) exchange rate appears to be in a holding pattern this morning in the run up to the European Central Bank’s (ECB) policy decision on Thursday.

At the time of writing the EUR/USD exchange rate is virtually unchanged from its opening levels this morning, with the pairing sitting just shy of $1.16.

Euro (EUR) Exchange Rates Hold Ahead of ECB Rate Decision

The Euro (EUR) is treading water against the US Dollar (USD) and most of its other peers this morning as investors await the conclusion of the ECB’s latest policy meeting tomorrow.

While no policy changes are expected from the bank this month, EUR investors will be eager to get their hands on the ECB’s latest microeconomic forecasts.

This could see the Euro tick lower tomorrow if the ECB revises its growth forecasts downwards as some analysts predict.

However it may be ECB President Mario Draghi’s accompanying message that comes under the closest scrutiny on Thursday as investors look for any hints on whether the next ECB rate hike can be expected at the very end of 2019 or possibly a little earlier.

This could see the Euro shoot higher if Draghi appears to tip the scales in favour of those economists who forecast that the bank could raise interest rates next September.

US Dollar (USD) Stalls over NAFTA Trade Talks

At the same time the US Dollar (USD) is showing limited movement this morning after the currency stalled on Wednesday following reports that Canada may be willing to make concessions to the US to help break the impasse in NAFTA negotiations.

According to media reports Ottawa is said to be ready to offer the US limited access to Canada’s dairy market as part of a concession to allow NAFTA talks to move forward.

Trump has repeatedly criticised Canada’s reluctance to open its dairy market to the US so it is hoped this could allow the two sides to reach an agreement before a deadline in October.

The potential of an easing of trade tensions between the US and Canada came as a relief to markets, with a slight upswing in risk sentiment, weakening safe haven demand and leaving the US Dollar to languish this morning.

EUR/USD Exchange Rate Forecast: Will Contraction in Eurozone Factory Output Drag on the Euro?

While the ECB meeting may currently be the main focus for markets, the Euro US Dollar (EUR/USD) exchange rate could still see some movement in the meantime with the release of the latest Eurozone industrial production figures later this afternoon.

Economists forecast today’s data will show that factory output contracted for the second month in a row in July, likely driven by weak overseas demand amid ongoing global trade uncertainty.

Meanwhile the US Dollar may look to tick higher this afternoon with the release of the latest US Producer Price Index, with an expected rise in producer prices last month potentially being reflected in Thursday’s US inflation reading.