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Trump’s Tax Plans: Can the Euro Rise against the US Dollar despite US Market Support?

The Euro has been tight against the US Dollar today, with the wait for Donald Trump’s hinted tax reform plans taking its toll on the pairing.

  • EUR USD rate flat at 1.06 – USD EUR trades at 0.94
  • Euro tight as Greek debt crisis rolls on – Hopes of resolution on Wednesday
  • US Dollar aided by Trump tax comments – ‘Phenomenal’ plans could focus on protectionism
  • Euro rally possible if GDP figures rise tomorrow – US Dollar investors focused on incoming Fed speeches

The Euro US Dollar exchange rate has trended closely today ahead of a possible breakthrough in the Greek debt crisis.

European Commissioner Pierre Moscovici is hoping to relieve the building pressure between Greece and its creditors, having pledged to travel to Athens on Wednesday and ‘keep [the] programme on track’. Moscovici also repeated the European Commission’s forecast that;

‘economic activity in Greece is expected to expand strongly in 2017-18’.

The lingering threat of ‘Grexit’ – a forced or deliberate departure from the Eurozone by Greece – has been hanging over the single currency bloc since 2010. The latest news has brought back recurrent fears from mid-2015, with German creditors in particular putting extra strain on negotiations.

Additionally, the Euro’s closeness against the US Dollar has been partly influenced by support on the US side, which has come from none other than President Trump.

Though vague in the extreme, Trump’s promise to reveal ‘phenomenal’ tax reforms in the near-term has inspired investors, who have subsequently sunk into the US Dollar in the hopes that Trump will ring true.

Trump’s campaign pledges involved simplifying the tax code and removing tax deferrals on US companies operating overseas.

The Euro could climb against the US Dollar on Tuesday morning when Eurozone-wide GDP stats come out, especially as the overall Eurozone figure is expected to rise on the quarter and the year.

Any EUR USD advances may be undermined in the afternoon, however, given that a trio of Federal Reserve speech are incoming.

Officials Jeffrey Lacker, Dennis Lockhart and Robert Kaplan are due to speak and their remarks will be especially impactful given that they are being made after Trump’s seemingly ambitious tax promises.

Current EUR USD Interbank Exchange Rates

At the time of writing, Euro US Dollar trading was in the region of 1.06 while US Dollar Euro trading was at 0.93 today.