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Euro to US Dollar Exchange Rate Investors Anticipate Major US Data

Euro to US Dollar Exchange Rate Movement Mixed on Eurozone Data

As this week’s Eurozone data thus far continues to paint a mixed picture of the Eurozone’s economic outlook, the Euro to US Dollar (EUR/USD) exchange rate has been unable to sustain much in the way of movement.

After last week’s wide EUR/USD fluctuations which left the pair at the level of 1.1305 over the weekend, the pair’s movement has been steadier so far this week.

At the time of writing on Tuesday, EUR/USD was trending just above the week’s opening levels, after sliding back from yesterday’s modest gain to 1.1329.

This week’s movement so far has been largely due to Eurozone data driving the Euro (EUR), while the US Dollar (USD) lacks the drive to do much since last week’s more dovish stance from the Federal Reserve.

Euro (EUR) Exchange Rates Fails to Extend Gains as German Consumer Confidence Slides

Following last week’s highly disappointing Eurozone manufacturing PMIs from Markit, Monday helped the Euro to rebound just slightly as Germany’s Ifo business confidence data from Ifo beat forecasts.

Ifo’s March expectations figure rose to 95.6, current conditions to 103.8 and business climate to 99.6. It indicated that Germany may indeed be seeing a positive turn in economic activity, following months and slowdown.

However, this modest boost in Euro demand was quickly weighed again this morning, as GfK’s German consumer confidence report from April came in short of forecasts.

The figure was expected to come in at 10.8, but instead slowed to 10.4. The previous figure was revised lower too, from 10.8 to 10.7. According to GfK Researcher Rolf Buerkl:

‘Whilst consumers are certainly not assuming that Germany will fall into recession this year, they do see a noticeable cooling off of economic activity.’

It was followed by France’s March business confidence report, which also fell short of forecasts and put a little additional pressure on the Euro.

US Dollar (USD) Exchange Rate Edges Higher as Treasury Yield Selloff Cools

On Monday, US Treasury bond yields plunged to their worst levels in 15 years, causing a yield curve that in the past has pointed towards a recession being possible in the future.

As markets briefly speculated on the possibility of a US recession within the foreseeable future, the US Dollar was unappealing at the beginning of the week.

However, analysts believe the downside in yields may have passed its worst. According to Masafumi Yamamoto, Chief Forex Strategist at Mizuho Securities:

‘The Dollar has tracked US yields. But the trend may have run its course, with little further downside seemingly remaining for yields,’

Still, investors are hesitant to make any big movements in the US Dollar following last week’s dovish tone from the Federal Reserve, and some investors still speculate that the Fed could cut US interest rates this year which is keeping pressure on the US currency.

Euro to US Dollar (EUR/USD) Exchange Rate Investors Await US Housing and Trade Data

Markets still have little reason to move much on the US Dollar this week, as investors steady from the bond yield movement, and Federal Reserve interest rate cut bets continue to weigh.

With more notable US data due in the coming days though, particularly towards the end of the week, the Euro to US Dollar exchange rate is more likely to be driven by the US Dollar again.

US housing starts and building permits data will be published this afternoon, as well as US consumer confidence data from CB.

More notable US trade balance data will be published tomorrow, with major US growth rate and Personal Consumption Expenditure (PCE) data coming in later in the week.

These, as well as shifts in risk-sentiment, will cause US Dollar movement.

Meanwhile, key Eurozone confidence data, as well as German inflation and retail sales data, will influence the Euro and the Euro to US Dollar exchange rate towards the end of the week.