Euro US Dollar Exchange Rate Fluctuates ahead of Busy Week
The Euro US Dollar (EUR/USD) exchange rate is struggling to find a clear direction today. A lack of data is leaving the currency pairing exposed to market sentiment.
At time of writing the EUR/USD exchange rate is trading around $1.0521, relatively unchanged from this morning’s opening levels.
Euro (EUR) Supported by Energy Supply Reassurances
The Euro is failing to muster up much support today amidst a lack of data. With the rest of the week filled with key economic releases, risk appetite takes the top billing for Monday.
European Commission President Ursula von der Leyen reassured investors that Europe’s energy supply is primed for the coming winter. With fears of an energy crisis weighing on the Euro, von der Leyen’s comments have allayed these concerns. Von der Leyen said:
‘Despite the action that we have taken, we might still face a gap of up to 30 billion cubic metres (bcm) of gas next year.’
However, von der Leyen also went on to express concerns over next year’s winter shortage. The International Energy Agency (IEA) warned that Europe could face a shortage next year if Russia continues to cut supplies. The IEA urged governments to do more and to act swiftly to combat a potential energy crisis.
US Dollar (USD) Undermined by Cautious Market
Meanwhile, the US Dollar is struggling to find much support today as a lack of major data is leaving the ‘Greenback’ open to risk appetite. With a hectic week of key economic indicators, investors appeared cautious ahead of the latest CPI inflation and the Federal Reserve’s interest rate decision. The Chinese government also announced it will take the Covid tracking application offline. With the world’s second largest economy rolling back their economy-stalling Covid policies, safe-haven flows dry up, potentially sapping demand for the US Dollar.
Euro US Dollar Forecast: Softening US inflation to Temper Fed Rate Hike Bets?
Looking ahead, the Euro US Dollar exchange rate could see further fluctuations when the headline CPI inflation reading will be released for the US. An expected further softening of inflation could see rate hike expectations pared.
Meanwhile, German inflation rate data could provide a preview for the rest of Eurozone CPI reading. If Europe’s largest economy shows a softening of inflation, the rest of the Euro area could follow suit. However, with core inflation expected to remain elevated, EUR investors could remain buoyant.
