Low Confidence in US Trade Policies Lead to EUR/USD Exchange Rate Gains
The Euro (EUR) is trading higher against the US Dollar (USD) today, mainly due to low confidence among USD investors.
This appreciation has pushed the EUR/USD exchange rate up and interbank rate of $1.16, above the week’s current low of $1.15.
The latest Eurozone economic data has been relatively unsupportive, with finalised retail sales figures confirming slowing activity during June.
Month-on-month sales were flat at 0% and the annual figure showed a decline from 1.6% to 1.4%, beyond the expected 1.5% result.
The more high-impact year-on-year reading has fallen from 3.7% since November 2017, so today’s confirmed slowdown has limited demand for the Euro.
German Migration Deal Pushes EUR/USD Exchange Rate Higher
As well as a weak US Dollar (USD), the Euro (EUR) has been supported in the EUR/USD exchange rate pairing today by the latest political developments.
These specifically pertain to Germany, which has stabilised after last week’s EU summit, in which migration was a key topic.
EU leaders were in agreement after the meeting, but German Chancellor Angela Merkel faced domestic opposition from Interior Minister Horst Seehofer.
Mr Seehofer, a party leader in Mrs Merkel’s coalition government, had threatened to resign over differences in migration management.
Mrs Merkel has since diffused the crisis and stabilised the government, which has reassured Euro traders.
Internal Strife on Trade Wars Weakens US Dollar to Euro (USD/EUR) Exchange Rate
The US Dollar (USD) has been in low demand today, seeing losses against the Euro (EUR) and most other currency peers.
This poor performance is down to traders fearing the US could be harmed by ongoing trade wars with major global economic powers, like the EU and China.
Highlighting the possibility of problems caused by US-initiated trading conflicts, US Chamber of Commerce President Thomas Donohue said:
‘The administration is threatening to undermine the economic progress it worked so hard to achieve.
‘We should seek free and fair trade, but this is just not the way to do it.’
Euro to US Dollar Exchange Rate Forecast: Will Eurozone PMIs Trigger EUR/USD Advance?
Looking ahead, Wednesday morning could bring greater Euro to US Dollar (EUR/USD) gains when Eurozone composite and services PMIs are released.
These final readings are tipped to show rising activity during June, which could boost the Euro.
Tomorrow is the Independence Day holiday in the US, so there won’t be any major US data releases to interrupt any potential EUR/USD gains.