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Improving Italian Inflation Triggers Euro to US Dollar Recovery

The Euro has made marginal gains against the US Dollar today, although these gains are partly due to the US Dollar currently being a weaker currency.

  • EUR USD rate climbs to 1.1894 – Small USD EUR dip to 0.8405 seen
  • Euro posts higher on Italian inflation – Continued support comes from industrial figures
  • US Dollar slips on income concerns – Wide disparity remains between rich and poor
  • Euro could dip on trade balance stats – US Dollar uncertainty ahead on inflation data

Yesterday brought losses for the Euro to US Dollar exchange rate. The pairing opened trading in the region of 1.1971 but closed around 1.1892.

Euro Appreciates after Italian Inflation Rises

On a relatively quiet day for the Eurozone, the Euro has made minor gains against the US Dollar.

This advance comes after forecast-beating industrial data on Wednesday and positive Italian ecostats today.

In the latter case, Italy has reported a rise in inflation across the board in August, which has raised the outlook on the Italian economy.

This comes as some believe that the EU and Eurozone are poised for a strengthening, coming as the UK departs from the multinational union.

Fears about Income Disparity keep US Dollar Down against Euro

Although the US Dollar has not crashed against the Euro today, the pairing has still fallen due to background concerns about US incomes.

Recent statistics have shown that while poverty has fallen and overall incomes have risen over the past three years, there is still a yawning gap between the top and bottom tiers of society.

The highest 5% of earners saw a 5.5% increase in earnings during 2016, but the lowest 20% reported a mere 2.5%.

Earnings were a hot topic during last year’s presidential election and could continue to influence perceptions of the economy as Donald Trump attempts to put his policy changes in place.

EUR USD Forecast: Euro may Lose Ground on Trade Balance Figures

The Euro could slip against the US Dollar on Thursday morning, when Eurozone-wide trade balance stats come out.

In July, the overall trade surplus is forecast to slip from 26.6bn to 21.4bn, which might lead to the Euro slipping on trader concerns.

That said, even a forecast-matching result would leave the Eurozone with an enviable trade surplus, which might prevent any major EUR USD exchange rate losses.

On the other side of the pairing, US Dollar traders are looking ahead to this afternoon’s inflation rate announcements for August.

Looking at the annual readings, higher base inflation is expected to come but the core figure is predicted to fall.

Out of the two measures, the core is the more impactful, as it provides the most accurate reading. If estimates prove accurate then the US Dollar could decline on the news, as it would be a step back when interest rate hikes are concerned.

Current Interbank EUR USD Exchange Rates

At the time of writing, the Euro to US Dollar (EUR USD) exchange rate was trading at 1.1894 and the US Dollar to Euro (USD EUR) exchange rate was trading at 0.8405.