USD/EUR Exchange Rate Steadily Declines despite Cool German Factory Orders
Recent confusion as to whether the US Dollar is deserving of its high valuation has seen the USD/EUR exchange rate soften steadily on Monday in spite of disappointing German data. Euro struggles continue as positive sentiment towards the single currency seems to be a long-distant memory, especially when the bloc’s largest economy continuously fails to deliver.
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It has been no secret that the US Dollar has topped the currency market charts over the past month or so. However, the ‘Greenback’ (USD) bullishness was seemingly independent of economic data but rather as a result of trader speculation that the Federal Reserve will normalise monetary policy in the near-future. This rang alarm bells for investors over the past week as they feared that the high valuation wasn’t necessarily warranted, and the US Dollar softened a little in compensation.
Friday’s American labour market data, however, certainly did justify a Dollar uptick and the markets responded by allowing the Dollar to regain the losses experienced over the past week. Particularly positive for those invested in the ‘Buck’ (USD) was a decline in unemployment.
After the European Central Bank elected to introduce yet more stimulus on Thursday, the Euro has generally taken up the mantle of bottom feeder. Friday’s European data proved to be mostly disappointing and the Euro declined against the majority of the high-yielding currencies as a result. A positive Eurozone Retail Sales score wasn’t enough to micrify yet more disappointing German data.
The US Dollar to Euro exchange rate has hit a low today of 0.7963.
A complete absence of American data on Monday has seen the US Dollar decline against many of its most traded rivals. A lack of data hasn’t been the only cause of the US Dollar downtrend. Once again, confusion over the timing of a Federal Reserve rate increase has aided the ‘Greenback’ softening. Attempting to gauge whether the Dollar valuation is as a result of speculation or economic data has caused traders to pull away from the US Dollar.
European data has been relatively unfavourable on Monday. The fact the Euro is making advances on the US Dollar, albeit fractionally, highlights the confusion surrounding ‘Greenback’ valuation.
Non-seasonally adjusted Yearly German Factory Orders were forecast to gain by 2.6% following an increase of 5.9% in July, but the actual result showed a contraction of -1.3%. Both the German and Eurozone Retail PMIs cooled from the previous figures.
Forecast for the US Dollar to Euro Exchange Rate
With little in terms of influential domestic data on Tuesday; those invested in the US Dollar will be looking to consumer credit to initiate volatility. Consumer Credit is expected to decline from $26.006 billion to $20.000 billion.
Euro investors will be looking towards German Industrial Production which is forecast to decline from 2.5% to -0.5%.