Euro to US Dollar Exchange Rate Forecast: EUR/USD Could Recover if US Non-Farm Payroll Stats Disappoint

Euro to US Dollar Exchange Rate Tumbles to Two-Week-Low Ahead of Friday’s US Data

Due to a lack of overly-impressive Eurozone ecostats this week, investors have had little reason to support the Euro to US Dollar (EUR/USD) exchange rate. On the other hand, the US Dollar (USD) has been supported by hopes about negotiations on US trade stances.

EUR/USD may be in for another difficult week. The pair saw modest losses last week and on Thursday morning the interbank level touched a low of 1.22.

This was the lowest EUR/USD level in over two weeks, and the pair continues to trend below 1.23 at the time of writing.

The US Dollar has been more easily able to gain against a weaker Euro (EUR) this week, amid cautious market optimism that Donald Trump will eventually look to resolve trade issues with talks rather than escalating tariff action.

However, EUR/USD losses have still been relatively limited due to political and trade uncertainties. USD investors are anticipating key US Non-Farm Payroll data on Friday before making any further big moves on the currency.

Euro (EUR) Exchange Rates Weaken on Eurozone Retail and PMI Data

Following market expectations for continued dovishness on interest rates from the European Central Bank (ECB), the Euro has seen weak performance this week.

The Euro came under additional pressure on Thursday as the Eurozone’s retail sales and PMI stats fell short of forecasts.

Eurozone retail sales were forecast to come in at 0.6% month-on-month and 2.1% year-on-year, but the results only printed at 0.1% and 1.8% respectively.

The previous figures were disappointingly revised lower too. Monthly inflation was revised down from -0.1% to -0.3% with the yearly figure being revised from 2.3% to just 1.5%.

Markit’s final March services and composite PMIs for the Eurozone fell short of projections too, indicating that the Eurozone’s strong growth trends were slowing faster than expected.

US Dollar (USD) Bolstered by Hopes for Trade Resolutions

Despite a lack of particularly supportive US data so far this week, the US Dollar has been supported by ongoing market hopes that Donald Trump could negotiate his protectionist stance on trade.

While trade jitters have also limited the US Dollar’s gains this week, the currency’s advances have been largely due to hopes that things could end in negotiation.

This has left US Dollar trade mixed, but the currency has benefitted from Euro weakness.

On Thursday, the US Dollar was supported by market speculation that a US-China trade war is becoming less likely, with leaders from both nations saying they wished to avoid one.

On Thursday afternoon, China indicated it was seeking talks with the US over the latter’s steel and aluminium tariffs.

US data has done little to inspire USD trade. ISM’s non-manufacturing PMI fell short of forecasts on Wednesday, but ADP’s March employment change results were better than expected.

Euro to US Dollar (EUR/USD) Forecast: US Non-Farm Payrolls in Focus

The US Dollar is likely to drive the Euro to US Dollar (EUR/USD) exchange rate’s movement for the remainder of the week as no notable Eurozone data will be published on Friday.

Many things could still influence USD trade however, such as developments on US and Chinese trade issues, as well as Friday’s key US data.

Friday will see the publication of the US Non-Farm Payroll report from March, which will include key figures such as the US unemployment rate and average earnings results.

US wage data could be particularly influential, and investors may not need to wait long to get the Federal Reserve’s outlook on this influential data as Fed Chairman Jerome Powell will hold a speech on Friday evening.

If the US jobs data impresses investors, the Euro to US Dollar exchange rate could end the week even lower.

Next week, EUR/USD investors will focus on the final March inflation figures from Germany and the US, as well as the Federal Reserve’s latest meeting minutes.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard