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Trump Comments Cause EUR USD Exchange Rate to Rally

  • EUR USD Bolstered by Trump Remarks – President-elect claims US Dollar is ‘too strong’.
  • US Dollar Falters Ahead of Inauguration – Markets still unsure about Trump.
  • Euro Rises Following Surge in Confidence – Economists upbeat about current condition of German Economy.

The EUR USD exchange rate surged this morning following a comment from Donald Trump about the strength of the US Dollar.

Trump Comment Bolsters Euro US Dollar (EUR USD)

The Euro climbed against the US Dollar this morning after president-elect Trump said in an interview with the Wall Street Journal that the ‘Greenback’ is too strong.

Trump’s reasoning behind the remark was that the high value of the US Dollar was hurting US competitiveness, especially in terms of exports as US businesses could not compete against Chinese producers.

Trump blamed the Chinese government for holding down its own currency, which prevented US companies from competing, adding ‘[its] because our currency is too strong… it’s killing us”.

The comments caused the USD EUR exchange rate to plummet overnight, especially with a lack of any US domestic data to lift the ‘Greenback’ as the US markets took the day off to celebrate Martin Luther King Day.

Trump Uncertainty Weighs on US Dollar

The recent slide in the US Dollar following Donald Trump’s recent comments are only a small part of why the new administration has been pressuring USD.

Investors remain uncertain over where Trump stands on a number of policies. Despite being only a few days away from being sworn into office he is still yet to outline how he plans to implement his ambitious stimulus plans and create the thousands of jobs he promised voters. Not to mention the wall with Mexico, which became a key part of his campaign.

Adding to this uncertainty is Trump’s disruptive behaviour and tweets, with the president-elect becoming infamous for his late night twitter exchanges. As Steven Erlanger of the New York Times writes;

‘Mr. Trump’s unpredictability is perhaps his most predictable characteristic. The world is accustomed to his provocative Twitter messages, but is less clear about whether his remarks represent meaningful new policy guidelines, personal judgments or passing whims’

Euro Bolstered by German ZEW Survey

The Euro rise was also aided by the release of the latest German ZEW Survey on current conditions as it reported a surge in confidence.

Economist confidence in January rocketed from 63.5 to 77.3, reaching a five-year high and easily surpassing expectations that it would rise to 65.

However, the single currency was held back somewhat by the Economic Sentiment index as economist confidence for the German economy in the mid-long term only rose from 13.8 to 16.6 despite predictions it would reach 18.3.

EUR USD Exchange Rate Forecast: German Inflation Ahead

The EUR USD exchange rate may tumble on Wednesday following the release of Germany’s Consumer Price Index which is expected to show that the inflation rate showed no improvement in December, holding steady at 0.7%.

Meanwhile the US will release its own CPI tomorrow, which is expected to report that the US inflation rate jumped from 1.7% to 2.1% over the same period, likely strengthening the US Dollar.

With Trump’s inauguration at the end of the week, it is likely that the EUR USD exchange rate will be met with increased volatility this week as investors remain undecided on what impact the incoming president will have on the US economy.

Current Interbank Exchange Rates

At the time of writing the EUR USD exchange rate was trending around 1.07 and the USD EUR exchange rate was trending around 0.93.