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Eurozone Trading Boom Pushes Euro US Dollar Exchange Rate Up

The Euro remains at a historic high against the US Dollar, trading around a rate of $1.1416. This follows a pair of supportive trade-based announcements from the Eurozone.

  • EUR USD rate climbs to 1.1416 – USD EUR rate falls to 0.8757
  • Euro advances on trade data support – Eurozone trade surplus posts 12.9% annual rise
  • US Dollar slides on Fed concerns – Traders speculate on next US rate hike date
  • Euro may slide on next week’s inflation figures – Mix of major US data could bring further losses

The Euro remains near the best exchange rate in over a year against the US Dollar, thanks to highly supportive data regarding trade in the Eurozone.

Euro Boosted by Soaring Eurozone Trade Surplus

The Euro’s latest advance against the US Dollar has come after both the Netherlands and the Eurozone saw a rise in their May trade balances.

Both were previously at a surplus, so signs of further trading dominance have further raised confidence in the Eurozone as well as about the Euro.

In a historical context, this was a 12.9% increase in the Eurozone trade balance rise posted for May 2016.

Comments from Fed Chair Yellen Continue to Drag on USD EUR Exchange Rate

The US Dollar is out of the week’s worst trading against the Euro with a rate of €0.8758, but remains near the lowest exchange rate since May 2016.

The latest USD decline has been triggered by Federal Reserve Chair Janet Yellen, who has been testifying in Congress.

Amid forecasts that the Fed’s pace of interest rate hikes could slow in future, Yellen has also warned that the Trump administration may not be able to reach target levels of economic growth.

Commenting on the revised US GDP growth target of 3%, Yellen has called achieving this level of growth ‘quite challenging [but] wonderful if you can accomplish it’.

After another warning about the danger of drug addiction among the workforce, Yellen also added that inflation pressures could move in either direction.

Despite this balanced outlook, however, traders have been more focused on the danger of a ‘neutral level’ being reached for US interest rates. At this level, the Fed may stop raising interest rates due to a diminishing return on positive economic effects.

EUR USD Predictions: Euro Volatility Possible on Inflation and ECB Policy Meeting

The next major Eurozone news isn’t out until the coming week, which will open with inflation rate figures on Monday.

Forecasts are for a marginal slowdown in annual inflation in June, as well as a shift from -0.1% to -0.2% on the month. Both of these results could worsen Euro to US Dollar trading, as they would lessen the chances of the European Central Bank (ECB) considering an interest rate hike in the future.

Right on cue, Thursday will see the ECB hold its July policy meeting. Interest rates are not expected to change from 0%, but any signs of possible policy tightening may see the Euro appreciate against the US Dollar.

Upcoming US data will be out sooner, with today bringing inflation, sales and confidence figures for June and July.

Annual US inflation is forecast to dip from 1.9% to 1.7%, while the University of Michigan consumer sentiment score is also forecast to fall in July.

More positively, monthly retail sales for July are projected to climb from -0.3% to 0.1%.

Given that two drops are forecast compared to one rise, the US Dollar could remain down against the Euro by the end of today’s trading.

Current Interbank EUR USD Exchange Rates

At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1416 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8757.