Euro US Dollar (EUR/USD) Exchange Rate Trading Sideways as Investors Wait on Key Data
The Euro US Dollar (EUR/USD) exchange rate is rangebound this morning as the market remains muted ahead of US GDP data.
At the time of writing the EUR/USD exchange rate is trading at around $1.1054.
US Dollar (USD) Subdued ahead of US GDP
The US Dollar (USD) is wavering this morning as investors eagerly await the release of the latest US GDP growth rate. The data has the potential to drive significant movement in USD, so many traders are refraining from placing aggressive bets this morning, which is limiting the US Dollar’s movement.
Concerns about the current showdown over the US debt ceiling could also be muting USD, after the US House of Representatives moved forward yesterday with a bill to raise the United States’ debt ceiling, in exchange for spending cuts.
The main points of the bill would see the US debt limit increased by $1.5tn in 2024 alongside an overall rollback of federal spending, with Democrats and Republicans battling overspending as a default deadline looms. Economists have been worried about the serious threat of the US defaulting on its national debt, warning that a default would ‘send shockwaves through the economy’.
Adding to USD’s mixed movement are Federal Reserve interest rate rise bets and market risk appetite. A slight uptick in Fed bets is supporting the ‘Greenback’, while a risk-on tone undermines the safe-haven currency.
Euro (EUR) Flat following Eurozone Data
Today, the recently published Eurozone economic sentiment indicator has left EUR trading without any clear direction
The latest report edged higher from 99.2 to 99.3, though it came in below forecasts of 99.9, while reinforcing evidence of a lopsided economic recovery in the Eurozone. Morale among service providers improved month on month, exceeding forecasts, while confidence in the manufacturing sector declined.
These mixed results trapped the common currency in a narrow range, leaving it to waver sideways against the US Dollar.
Euro US Dollar Exchange Rate Forecast: GDP Data to Dent USD?
The Euro US Dollar exchange rate could experience gains upon the release of US GDP data this afternoon. Economists expect the US economy to have grown by 2% in the first three months of 2023. Although this is a slowdown from the previous quarter, it would still be strong growth.
This sign of health in the world’s largest economy could cheer global markets, with the upbeat mood potentially weighing on the safe-haven US Dollar.
Looking to tomorrow, the Euro could see some gains if the latest Eurozone GDP data shows growth in the economy. Forecasters expect the Eurozone economy to have expanded by 0.2% in the first quarter of this year, having stalled at the end of 2022.
The US Dollar has some vital economic data releasing tomorrow. Should the core PCE price index show inflation has eased below economists’ expectations then it could mark the beginning of the end for Fed rate hikes, putting pressure on USD.