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Will Eurozone Inflation Figures Trigger Major Euro to US Dollar Gains?

The Euro has made fractional gains against the US Dollar today but may be able to drive higher in the hours ahead if Eurozone inflation figures match forecasts.

  • EUR USD exchange rate climbs to 1.05 – USD EUR trends at 0.94
  • Euro sees minor advance on Spanish jobs data – Tension rises over incoming inflation stats
  • US Dollar fails to sustain rally on hawkish Fed comments – More US uncertainty as Russian links questioned
  • Euro advance expected if inflation figures rise – Rise in US jobless claims could weaken USD today

The only Eurozone news published today has been pretty low impact, and therefore had little impact on the Euro to US Dollar exchange rate. Spanish unemployment drop by -9.36k persons in February, while Spanish GDP has slowed annually in Q4 but remained at 0.7% on the quarter.

While this news has supported the Euro, EUR has still been prevented from rallying due to concerns about what incoming inflation figures could show.

Forecasts have been for a rise in Eurozone-wide inflation from 1.8% to 2% in February, which would put the rate right on the European Central Bank’s (ECB) target.

This may prompt the ECB to adjust its monetary policy outlook for the future and if it looks like policy tightening could be on the way, then the Euro will likely appreciate.

The US Dollar has declined today as a result of profit-taking following USD’s recent gains in response to remarks from Fed officials.

As well as Dallas Fed Bank President Robert Kaplan advocating a near-term US interest rate hike, fellow official Lael Brainard optimistically stated;

‘Assuming continued [economic] progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path. We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing and risks to the outlook are as close to balanced as they have been in some time’.

Less supportive has been the latest scandal to hit the Trump administration, with US Attorney General Jeff Sessions coming under scrutiny for supposed links to the Russian Ambassador, Sergey Kislyak. This comes weeks after Trump’s pick for National Security Advisor, Michael Flynn, had to resign due to illegal contact with Russian officials prior to taking office.

As well as the incoming Eurozone inflation figures, unemployment stats are also due; in January the jobless rate is believed to have held at 9.6% – a result which is unlikely to have much impact on the Euro.

Today is fairly quiet when it comes to US news, with the biggest announcement being jobless claims stats for late February. The US Dollar could weaken if continuing claims rise as expected, although as a drop is expected for initial claims USD may end up unchanged by the report.

Current EUR USD Interbank Exchange Rates

At the time of writing, the Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.05 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.94 today.