US Dollar to Euro (USD/EUR) Exchange Rate Bullish; Inflation Fears Shroud Eurozone
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Monday sees the US Dollar trading within a relatively tight range between 0.7444 and 0.7454.
This week anticipates the result of the European Central Bank (ECB) meeting, whilst also seeing the publication of highly significant US data.
The US will publish the Non-Manufacturing Composite index on Tuesday alongside Factory Orders figures.
Meanwhile the US Trade Balance is due for publication on Wednesday, followed by Initial Jobless Claims, Continuing Claims and Consumer Credit on Thursday.
Unemployment figures will be received with scrutiny as the Federal Reserve have suggested that any hikes in interest rates will be fuelled by positive advancements in the employment market.
Last Friday’s employment data failed to reach the highs economists had hoped, causing the ‘Buck’ to flatten slightly.
Expert in the field Brad Bechtel commented: ‘The jobs report put a bid into the [emerging-market] trade as investors have scaled back somewhat their expectations for a rate hike by the Fed.’
Both currencies however are trading amid recent geopolitical tensions following the downing of Malaysian Airlines passenger flight MH17. The Euro will face extra volatility as the EU and US enforce sanctions against Russia.
The Euro has lost its popularity in the currency market as uncertainty shrouds the fragile Eurozone recovery.
Expert in the field Imre Speizer commented: ‘The trend in Euro is clearly down, and we think that story’s got further to run. Draghi will maintain his dovish tone for sure, given the inflation data across Europe has been mostly weak.’
Monday saw the release of disappointing Investor Confidence reaching only 2.7, despite being forecast to reach 9.0.
Conversely, the Eurozone Producer Price Index reached 0.1% today, bettering economists’ predictions of 0.0% showing a positive—albeit small—indication toward inflation levels.
However fears for the Eurozone inflation levels are extremely prominent at present.
Economist Howard Archer commented: ‘There is undeniably a very real risk that Eurozone consumer price inflation could go lower still… barring an appreciable rise in oil and gas prices resulting from geo-political factors hitting supplies.’
For now the US Dollar will remain bullish in the USD to EUR currency pairing.
The Euro to US Dollar exchange rate is presently trending at 1.3421.