Euro to US Dollar Exchange Rate Firming Ahead of Major PMI Results
Despite the Federal Reserve continuing to indicate that it will keep US monetary policy paused for the time being, the Euro to US Dollar (EUR/USD) exchange rate is still steadily climbing today. The Euro (EUR) is benefitting from US Dollar (USD) weakness.
Since opening this week at the level of 1.1054, EUR/USD has been trending with an upside bias. While movement has been mixed, EUR/USD has been generally sustaining most of its gains.
Near the beginning of the week, EUR/USD touched on a fortnight best level of 1.1088, and the pair was trending just below those levels again at the time of writing.
The US Dollar has been weakened by concerns that the US economy will keep slowing amid the US-China trade war, due to fresh speculation that US-China trade negotiations could collapse.
Euro (EUR) Exchange Rates Benefits from Rival Weakness Ahead of Key Data
While the Euro has been unable to strengthen significantly due to lasting concerns about the health of the Eurozone economy and the strength of some rivals like the Pound (GBP), the shared currency is gaining against its biggest rival this week.
Due to the negative correlation shared between the Euro and the US Dollar, the Euro has been one of the currencies benefitting the most strongly from the US Dollar’s mixed movement in recent sessions.
This is despite a lack of notably strong Eurozone data this week so far, though investors are becoming a little more optimistic that the Eurozone economy is showing signs of recovering from months of slowdown.
For now, the Euro is benefitting from weakness in the US Dollar as Euro investors await major Eurozone data due for publication tomorrow.
US Dollar (USD) Exchange Rates under Pressure amid US-China Trade Concerns
Last night saw the Federal Reserve publish its latest meeting minutes, in which the bank met expectations and signalled that it was pausing its interest rate cut cycle for the time being.
However, the US Dollar ultimately failed to benefit much from this news and continued to slide against the Euro today.
This is because analysts predict that if US ecostats continue to disappoint investors or if US-China trade relations worsen again, the Federal Reserve could still be pressured into becoming more dovish again.
Much of the US Dollar’s recent strength has been due to hopes that the US and China were closing in on a trade deal.
There are concerns that trade relations are worsening due to China wanting a bigger tariff rollback and the US Senate passing a bill to support Hong Kong protestors. This is keeping markets in more of a wait and see mode on the US Dollar.
According to Stephen Gallo, European Head of Currency Strategy at BMO Financial Group London:
‘We’re really just waiting to see what happens on the trade front,
The shift in sentiment is warranted, a lot of good news had been in the price and some of that has been taken out.’
Euro to US Dollar (EUR/USD) Exchange Rate Traders Await Friday’s Major Ecostats
The Euro to US Dollar (EUR/USD) exchange rate is on track to sustain gains this week, but that could change depending on the results of a slew of ecostats due for publication tomorrow.
Most of this week’s most influential Eurozone data will be published tomorrow morning, including German growth stats and Eurozone PMI projections.
Germany’s final Q3 growth rate report is expected to confirm that Germany avoided a recession this year. If German growth prints a contraction, the Euro could plummet as a surprise recession would be confirmed.
If German data meets projections though, markets will be looking to the Eurozone’s November PMI projections. Germany’s manufacturing PMI projections could be particularly influential as they will give investors a better idea of if the German factory sector is recovering.
Some of the day’s US data could be influential as well. Markit’s US PMI projections, as well as Michigan consumer sentiment stats for November, could cause some late-week Euro to US Dollar (EUR/USD) exchange rate movement.