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Solid Eurozone Stats Help Euro to US Dollar Exchange Rate Hold Ground on Thursday

Euro to US Dollar Exchange Rate Recovers to Week’s Opening Levels on German Factory Data

After slipping earlier in the week on mixed Eurozone data and a sturdy US Dollar (USD), the Euro to US Dollar (EUR/USD) exchange rate has recovered. On Thursday, solid German factory data bolstered the Euro (EUR).

Could EUR/USD be on track for another week of gains though? That depends on upcoming US data. Last week, EUR/USD climbed from 1.1653 to 1.1688, and on Thursday morning the pair touched on a weekly high of 1.1704.

EUR/USD struggled to hold above the level of 1.17, especially as trade war jitters continued to weigh more on the Euro than on the US Dollar.

On top of this, much of the US Dollar’s weakness this week has been due to quiet holiday trade and anticipation for the Federal Reserve’s upcoming meeting minutes report.

The US Dollar could easily push EUR/USD lower again if the Fed minutes are more hawkish than expected, or if upcoming US data beats forecasts.

Euro (EUR) Exchange Rates Steady Following Optimistic Eurozone Ecostats

Demand for the Euro was a little stronger on Thursday, as the day’s Eurozone data continued a recent trend of indicating that the economic slowdown seen at the beginning of the year was just a temporary one.

Following underwhelming Eurozone manufacturing and retail sales stats at the beginning of the week, the Euro saw stronger support thanks to Wednesday’s Eurozone services PMIs, and Thursday’s German factory orders results.

German factory orders from May were forecast to improve from -2.5% to 1.1% month-on-month, but the figure unexpectedly surged to 2.6% and the previous figure was revised higher of -1.6%.

As a result of this, and the Eurozone’s June retail PMI edging higher from 51.7 to 51.8, investors were able to overlook Germany’s latest construction PMI coming in short of forecasts.

However, while the German factory data did indicate that the Eurozone was rebounding from the weaker performance seen at the beginning of the year, the other mixed data did prevent the Euro from seeing stronger demand against the US Dollar (USD).

US Dollar (USD) Exchange Rate Investors Anticipate US Jobs and Fed News

Investors are hesitant to buy the Euro too much against the US Dollar, at least not until the key US data and news due on Thursday and Friday is published.

So far this week, the US Dollar’s strength has been limited.

Markets remain anxious about how US trade tariffs and the possibility of a US-sparked trade war could negatively impact the US economy.

This uncertainty showed in the latest US manufacturing PMIs, which were published by Markit and ISM on Monday.

Limp US Dollar trade continued on Wednesday while US markets were closed to observe the US Independence Day holiday.

Euro to US Dollar (EUR/USD) Forecast: Fed Minutes and Non-Farm Payrolls in Focus

While US Dollar trade has been light and limited so far this week, that could change before markets close on Friday if there are any surprising developments in US economic news or the Federal Reserve’s monetary policy outlook.

The Federal Reserve’s latest meeting minutes report will be published after European markets close on Thursday evening, and will give markets more detail on the bank’s monetary policy outlook.

If the Federal Reserve remains optimistic about the chances of four US interest rate hikes total in 2018 and gradual rate hikes next year too, the US Dollar may hold its ground and EUR/USD will struggle to climb.

However, if the Fed shows more concern than expected about US trade tariffs and the possibility of a trade war, the US Dollar could weaken and EUR/USD would advance more easily.

Friday’s US data will be highly influential too.

While Germany’s May industrial production results could influence Euro trade, Euro to US Dollar (EUR/USD) exchange rate traders are more likely to await the US Non-Farm Payroll data due on Friday afternoon.