The Euro US Dollar (EUR/USD) exchange rate has been mixed since markets opened this morning as a lack of notable data from the US limits the appeal of the ‘Greenback’.
At the time of writing the EUR/USD pairing are trending around the $1.1868 level as German wholesale prices rise the most in 40 years.
Euro (EUR) Supported by German Wholesale Prices
The Euro has found itself supported for much of the day following a sharp rise in German wholesale prices and a speech from European Central Bank (ECB) vice president, Luis de Guindos.
De Guindos today commented that Eurozone inflation would be on the rise until the end of the year, as the ECB look to new forward guidance at their next policy meeting.
EU economics commissioner Paolo Gentiloni was less optimistic surrounding the Eurozone’s proposed recovery, saying:
‘The spread of the delta variant is a stark reminder that we have not yet emerged from the shadow of the pandemic.’
‘I am not seeing now at the horizon new restrictions substantially coming all around Europe.’
US Dollar (USD) Exchange Rate Steady as US Markets Await Inflation Data
The US Dollar (USD) has been mixed for much of the day as a lack of economic data paired with a strengthening market mood limits the appeal of the ‘Greenback.’
As investors await the latest inflation rate data from the US, USD exchange rates have today struggled to hold onto any meaningful gains.
Shinichiro Kadota, a senior financial strategist at Barclays, commented on what we could expect from the Federal Reserve if inflation figures impress:
‘If we see strong data, the Fed could bring forward their projection for their first rate hike further from their current forecast of 2023. That would also mean they have to finish tapering earlier.’
A softening of inflation would benefit risk-correlated currencies and limit the safe-haven US Dollar further.
Euro US Dollar Exchange Rate Forecast: Inflation Figures in Focus
Euro (EUR) investors will be looking towards tomorrow’s German inflation rate data, as inflation is expected to have soften in the Eurozone’s largest economy, the single currency could suffer.
US Dollar (USD) traders will look towards their own release of inflation data for June, a further rise in inflation could cause markets to worry.
The EUR/USD exchange rate will continue to be driven by any further coronavirus developments in the coming days.