Euro to US Dollar (EUR/USD) Exchange Rate Continues To Trend Steadily On #PanamaPapers Nerves
EUR/USD remains around the level of the weekend’s high as the weakening US Dollar clashes with the strengthening Euro. While the pair has moved slightly in USD’s favour due to disappointing German Factory Orders (printing at only 0.5%), both sides remain anxious due to the ‘Panama Papers’ leak putting many elite members of the global economy under scandalous scrutiny.
The leak details a huge array of deals focused on using ‘tax havens’ as a means of tax evasion. Various well-known members of the societal and political elite are mentioned among its documents.
The Euro to US Dollar (EUR/USD) exchange rate clambered to its highest point since October 2015 on Friday on positive Eurozone data despite many positive releases from the US towards the end of the day.
Eurozone Consumer Price Index (CPI) Boots Confidence in Euro
Investors were eager to return to the Euro towards the end of last week. While the shared currency had previously weakened on analyst fears of further European Central Bank (ECB) easing methods, an optimistic CPI from Germany and the Eurozone as a whole seems to have restored confidence slightly.
Since last week, investors have begun to settle on the US Dollar. The EUR/USD pairing currently trades around -0.2% and is trending in the region of 1.1370 – down just slightly from the week’s opening level of 1.1395.
This comes shortly after the pair reached a lofty 1.1429 last Friday, its highest point since October 2015.
Optimism towards the Euro improved throughout the week following an impressive German CPI release, which gave investors hope that the Eurozone economic situation was improving. However, general Eurozone CPI printed as expected.
While this slowed the Euro’s advance slightly, it did indicate that Eurozone inflation was progressing as the ECB expected, if not better, causing investors to feel they could relax a little. Eurozone Unemployment also released at 10.3% as forecast.
Impressive Non-Farm Payroll and ISM Manufacturing Prints Give Reeling US Dollar a Foothold
A huge slew of US data was released on Friday that seems to have inspired a little ‘Greenback’ strength. The currency spent most of last week reeling from risk-on sentiment after Federal Reserve Chairwoman Janet Yellen maintained a dovish stance on interest-rates.
Investors were heavily disappointed that interest-rates may not be hiked again until later in the year, weakening the US Dollar across the board. Fortunately for the ‘Buck’, most major US data prints throughout the week proved positive.
Friday’s data included March’s change in non-farm payrolls, which showed that an impressive 215k new jobs had been created over a predicted 205k. While the unemployment rate unfortunately increased slightly from 4.9% to 5%, this slight change seems to be offset by the number of positive prints.
March’s ISM data releases also printed higher than expected. The key ISM Manufacturing data came in at 51.8 over estimates of 50.7, a significant improvement on the previous 49.5. Prices paid printed at 51.5, much higher than the forecast 44.0 and considerably higher than the last result of 38.5.
The University of Michigan confidence survey also scored above estimates of 90.5, reaching 91.0.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast: ‘Greenback’ Likely to Recover?
As analysts and investors come to terms with positive US data releases, they may perhaps begin to move back on last week’s kneejerk escape from the US Dollar.
Both the Eurozone and United States have enjoyed mostly positive data in the last week and investor confidence towards their respective currencies is likely to increase. Further data releases this week may spur the EUR/USD pair’s movements however.
Later today, data on US factory and durable goods orders is due for release. While these reports are currently predicted to show declines, better-than-expected prints may continue to inspire confidence in the US economy’s current direction.
Tomorrow another key US ISM print is due for release, March’s Non-Manufacturing Composite. Currently predicted to release at 54.1 above February’s 53.4, better-than-expected results are likely to boost the ‘Buck’.
An ECB report on weekly and monthly quantitative easing settlements is also due for release later today, a report that may be able to inform investors on the success of the ECB’s current measures.
The Euro to US Dollar (EUR/USD) exchange rate currently trends around 1.1370 while the US Dollar to Euro (USD/EUR) exchange rate trends in the region of 0.8793.