The Euro was able to gradually creep up against a fluctuating US Dollar last week, with the greatest source of influence, Donald Trump, set to make a reappearance in the week to come.
The US Dollar was hit hard on Wednesday when Trump gave his first press conference of the year; it remains to be seen if incoming US economic turbulence will be better or worse.
Last week, the Euro gradually appreciated against the US Dollar from a starting rate of 1.05 to a closing 1.06.
Euro to US Dollar Exchange Rate Recap: Gradual EUR Gains Seen after ECB Minutes Last Week
The Euro was able to progressively rise against the US Dollar last week, though most of this movement was on account of the US Dollar’s massive drop in the middle of the week.
News from the Eurozone mainly concerned Germany and the overall currency bloc; in the former case, the German Government’s budget fell in 2016, though GDP rose.
The European Central Bank (ECB) brought its share of news as well, releasing minutes for a meeting late in the week.
Although policymakers expressed concerns about 2017’s key Eurozone elections in Germany, France and the Netherlands, they were also recorded as disagreeing about the ECB’s quantitative easing program.
In the latter case, this was thought to mean that bond buying in 2017 could be reduced, which was considered a welcome prospect to Euro investors.
US Dollar Rocked by Uncomfortable Trump Press Conference
The big news of last week came late on Wednesday, when President-Elect Trump gave a pre-inauguration conference in Trump Tower.
Low on details and high on controversy, the event had the effect of shattering US Dollar demand, not least because Trump’s solution to business conflicts of interest was to hand his empire to his sons.
The businessman remained dogged by embarrassing and disturbing accusations about his behaviour in a Moscow hotel room throughout his address (despite a lack of authentication) and the US Dollar tanked afterwards before briefly rising on Friday thanks to retail sales stats.
EUR/USD Exchange Rate Forecast
Next week, the greatest level of Euro US Dollar exchange rate movement is expected to come from Trump taking on the mantle of President, though this isn’t due to happen until Friday.
Before then, Eurozone news is set to cover November’s trade balance on Monday, ZEW sentiment scores on Tuesday and the first ECB interest rate decision of the year on Thursday.
In brief, a trade surplus expansion is expected, along with improving German ZEW sentiment. The ECB is not set to raise interest rates, so ECB President Mario Draghi’s press conference after the decision will be the real point of focus.
Pre-Trump data in the US will primarily consist of Wednesday’s December inflation rate figures, which are set to show an annual rise.
When Trump takes office on Friday, the US Dollar is predicted to crash due to the implications of four years under his administration, which could allow a major Euro upsurge in response.