Euro US Dollar (EUR/USD) Exchange Rate Steadies as Eurozone Business Sentiment Falls
The Euro US Dollar (EUR/USD) exchange rate is steady today and is currently trading around $1.1431 on the inter-bank market.
Today’s publication of German Gfk consumer confidence figures for February, which increased above expectation to 10.8, failed to provide any uplift for the Euro (EUR) today.
These potential gains for the Euro were further clipped after the publication of the Eurozone’s business climates for January, which fell below expectation to 0.69 – indicating a weakening of confidence in the economy.
Yesterday also saw the UK vote on various amendments to Prime Minister Theresa May’s Brexit withdrawal agreement, which saw the House of Commons vote for the ‘Brady’ agreement which challenges the Irish backstop clause originally negotiated between the UK and the EU.
EUR investors are remaining cautious as the EU has showed reluctance to renegotiate this aspect of the Brexit deal, raising fears of a potential no-deal between the EU and the UK and dampening some traders’ confidence in the single currency.
Later on today will see the publication of Germany’s harmonised year-on-year CPI figures for January which are expected to remain static.
US Dollar (USD) traders, meanwhile, will be awaiting today’s Federal Reserve interest rate decision which is expected to remain at 2.5%.
USD/EUR Exchange Rate Rangebound as ‘Greenback’ Investors Fear another Government Shutdown
Any dovish comments during the US FOMC press conference today following the interest rate decision could see USD fall against EUR.
Today will also see the publication of US ADP employment change figures for January which are expected to decrease, potentially hindering any chance of USD making further gains throughout the day.
These will be followed by the publication of US pending home sales figures for December which, however, are expected to increase.
USD investors, however, are remaining cautious after the recent re-opening of the US government after weeks of a partial shutdown, and with a looming second shutdown on the horizon, many traders are fearing for the health of the US economy.
Moody’s Investors Service, a bond credit rating agency, commented:
‘If another shutdown occurs, there could be a more severe impact on the U.S. economy than during the recently ended shutdown.’
President Donald Trump, meanwhile, has remained optimistic about the US economy, tweeting:
“Our economy, right now, is the Gold Standard throughout the World.” @IngrahamAngle So true, and not even close!
— Donald J. Trump (@realDonaldTrump) January 30, 2019
EUR/USD Forecast: Euro Could Fall against ‘Greenback’ on Signs of EU Political Unrest
EUR investors will be looking ahead to tomorrow which will see a raft of Eurozone data stats, with the most important release being the Eurozone’s GDP figures for the fourth quarter, which are expected to decrease.
Tomorrow will also see the publication of German unemployment figures for January which are expected to remain at 5%.
USD traders will also be looking ahead to Friday with the publication of US non-farm payrolls figures which are generally expected to disappoint, which could potentially see the USD/EUR exchange rate drop.
The release of Chicago PMI figures for January are also expected to decrease.
In political news, EUR traders will be looking at the developments between France and Italy which have recently erupted into a spat between Rome and Paris ahead of this year’s European Parliament elections – dampening single currency traders’ confidence in Europe’s political cohesion – and potentially weakening the EUR/USD exchange rate.