Fears over QE Extension Trigger Euro to US Dollar (EUR/USD) Exchange Rate Dip
ECB President Mario Draghi unsettled Euro traders on 14th March when he confirmed that the ECB could continue quantitative easing (QE) if necessary.
QE is the ECB’s policy of buying assets to stimulate growth; if it continues then the ECB’s will be reluctant to raise interest rates.
Highlighting the problem of lacklustre Eurozone inflation, Mr Draghi said;
‘We need to see a sustained adjustment in the path of inflation toward our aim, which is a headline inflation rate of below, but close to 2% over the medium term.
The performance of underlying inflation remains subdued compared with previous recoveries’.
US Dollar to Euro Exchange Rate Rises despite Mounting Pressures on US Economy
The US Dollar has gained ground against the Euro today in addition to making stable gains against the Pound and Australian Dollar.
This advance comes despite a wide range of negative impacts on the US economy at present.
As well as worries about the impacts of tariffs, there have been more recent issues raised about Donald Trump’s ability to interact with world leaders.
In a fundraising speech held on Wednesday, Mr Trump discussed a meeting with Canadian Prime Minister Justin Trudeau.
In a concerning incident, Mr Trump stated that he claimed that the US had a trade deficit with Canada, despite not knowing this as fact beforehand.
Trump concluded by asserting that the US does have a trade deficit with Canada, despite evidence to the contrary.
Euro to US Dollar Exchange Rate Outlook: EUR/USD Losses could Extend on Eurozone Inflation Slowdown
The Euro to US Dollar exchange rate may close weekly trading with a loss, given the current forecasts for Eurozone inflation rate printings on 16th March.
The morning’s figures are tipped to show a slowdown in finalised year-on-year inflation in February, from 1.3% to 1.2%.
This result would be a move away from the European Central Bank’s (ECB) 2% target and would lessen the chances of immediate ECB monetary policy tightening.
Although wage growth levels in the Eurozone are predicted to rise, the inflation rate readings may be considered the more important news by Euro traders.
The week’s last significant US economic news will come on Friday afternoon, consisting of the University of Michigan consumer confidence estimate for March.
The reading is tipped to decline slightly from 99.7 points to 99.3, which could lead to a small US Dollar to Euro decline before the end of daily trading.