Euro US Dollar Exchange Rate Forecast: EUR/USD Subdued as Eurozone Industrial Production Slides

EUR/USD Exchange Rate Flat as Eurozone Factory Output Contracts

The Euro to US Dollar (EUR/USD) exchange rate is trapped in a narrow range this morning as markets digest the Eurozone’s latest factory production figures.

At the time of writing EUR/USD exchange rate is virtually unchanged this morning, leaving the pairing close to this week’s opening rate at $1.1225 on the inter-bank market.

Euro (EUR) Exchange Rate Muted on Gloomy Eurozone Data

The Euro (EUR) is trading in a narrow range against the US Dollar (USD) this morning as markets digest the Eurozone’s latest economic releases.

According to data published by Eurostat, industrial production in the Eurozone contracted 0.3% in March, after previously contracting 0.2% in February.

The reading will come as a bit of a disappointment to EUR investors after factory output in Germany over the same period was shown to have risen.

Further capping demand in the Euro this morning was also the accompanying ZEW economic sentiment index which indicated that pessimism in the Eurozone returned with a vengeance in May.

The index was shown to have slipped back into negative territory this month, tumbling from 4.5 to -1.6 as concerns over deteriorating global trade conditions as well as worries of swelling support for Eurosceptic parties ahead of the upcoming EU elections led to a gloomier outlook from economists.

US Dollar (USD) Steady as Trump Seeks to Cool Trade Tensions?

Meanwhile, the US Dollar (USD) is also rangebound this morning as markets remain sensitive to the current developments in the US-China trade dispute.

Trade tensions between the two powers have escalated notably over the past week or so after the US hiked tariffs on $200bn of Chinese goods to 25% on Friday, before China responded in kind on Monday.

However, potentially in reaction to the sharp drop in US stocks at the start of the week, US President Donald Trump stuck a more upbeat tone regarding the ongoing trade talks than he had previously, tweeting late on Monday, that he has a ‘good feeling’ about the talks.

This has helped to calm markets this morning and clipped demand for the safe-haven US Dollar.

EUR/USD Exchange Rate Forecast: Rebound in German GDP to Buoy the Euro?

Looking ahead to tomorrow’s session, the Euro US Dollar (EUR/USD) exchange rate may look to accelerate following the publication of the Germany’s latest GDP figures.

Economists forecast the preliminary GDP reading for the first quarter will report that growth in the Eurozone’s largest economy will have rebounded at the start of 2019, expanding 0.4% after stagnating in the last quarter of 2018.

Meanwhile, barring any major developments in the US-China trade dispute, we are likely to see USD investors turn their attention to the latest US retail sales figures on Wednesday.

This could dampen the appeal of the US Dollar tomorrow afternoon, if domestic sales growth is reported to have slowed sharply in April as forecast by analysts.

Matthew Andrews

Contact Matthew Andrews