The past week saw the Euro to US Dollar (EUR/USD) exchange rate record notable gains; having started on a low of 1.0793, the single currency ended by hitting a high of 1.0964.
Euro Appreciated Last Week on US Dollar Slump
Last week mainly saw the Euro rise due to a deterioration in US Dollar demand. On the domestic front, the Eurozone economic releases published were either negative or neutral in their overall effect.
Monday opened with a decline in the German IFO Surveys, Wednesday brought Germany’s Consumer Confidence Survey which remained at 9.4 points and Thursday saw a diverse mix of Eurozone Confidence stats and German Inflation Rate figures, none of which were unanimously positive.
Unemployment Numbers Provide EUR with Unexpected Boost
Today has seen the Euro shoot up against its competitors due to far better-than-expected outcomes from unemployment data from both Germany and the Eurozone. The respective jobless rates moved from 6.3% to 6.2% and from 10.5% to 10.4%.
Additionally, while the reception has been decidedly mixed in the UK, the fact that UK-EU Referendum negotiations are progressing in line with a February finalisation of terms has also bolstered the stability of the Euro, albeit temporarily.
US Dollar Rocked by Disappointing Data
Last week’s economic conditions were generally unfavourable for the US Dollar and the publications coming out of the US so far this week have been similarly lacklustre.
Although US Consumer Confidence rose last week, the Fed displayed a fairly dovish stance during its rate decision and Durable Goods Orders for December fell along with Q4 GDP.
Yesterday saw the US Dollar weakened by a worse-than-expected ISM Manufacturing result, although today has seen the US currency rise after radical Republican candidate Donald Trump placed second instead of the expected first for the Iowa Caucus voting result.
This Week’s EUR/USD Exchange Rate Forecast
Over the rest of the week, Euro/US Dollar (EUR/USD) exchange rate movement may occur as a result of this afternoon’s speech from Fed official Esther George, tomorrow morning’s Eurozone Composite and Services PMIs for January and the later ISM Non-Manufacturing Composite for the same month.
While any speech from a Fed official is generally a high-impact event, even a hawkish or dovish statement from George may not have a profound effect on the US Dollar’s movement given that the next Fed interest rate decision isn’t due until March.
For the Eurozone’s glut of CPIs, forecasts are generally pessimistic, with either stagnation or declines predicted for Italy, France, Germany and the Eurozone as a whole. Despite this negativity, this does leave room for even slightly positive results to generate a significant amount of optimism among investors.
For the US Composite, a decline from 55.8 to 55.2 has been forecast.
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