UPDATE
The Euro to US Dollar (EUR/USD) exchange rate softened by around -0.2% on Tuesday morning.
After Eurozone M3 data showed that money supply in the euro-are grew less-than-anticipated, the shared currency edged lower versus its major peers. With an absence of further influential domestic data to provoke changes, the single currency is likely to continue trending lower versus its major peers. With that being said, however, US data has the potential to provoke market volatility. Should US Durable Goods Orders produce a disappointing result, the common currency would advance thanks to negative EUR/USD correlation.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1037.
Yesterday…
EUR/USD Conversion Rate Predicted to Tick Higher on Mixed German IFO Reports
The Euro to US Dollar (EUR/USD) exchange rate edged higher by around 0.3% on Monday afternoon.
Although German economic data produced a mixed-bag of results erring towards positivity, the shared currency continues to hold a weak position versus its major peers on Monday morning. After the European Central Bank (ECB) opted to hold rates and keep the asset purchase program unchanged last week, the single currency dived versus its peers. The depreciation was mainly the result of the accompanying speech from ECB President Mario Draghi. Not only did Draghi state that policymakers will review the program of quantitative easing in December, with a view to expansion should it prove necessary, but he also noted that another cut to the benchmark interest rate may be appropriate. Whilst analysts expected Draghi to talk down the Euro as a huge 10 cent gain against the Dollar was a massive concern to policymakers, the speech was ultimately far more dovish than had been anticipated.
On Monday morning the single currency failed to make any significant recovery after German data produced mixed results. October’s IFO Business Climate came in at 108.2 which was slightly better than the median market forecast 107.8. In addition, the IFO Expectations report for October bettered the market consensus of a drop from 103.3 to 102.4, with the actual result rising to 103.8. However, October’s IFO Current Assessment report came in at 112.6; falling beyond expectations of a drop from 114.0 to 113.5.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1053.
USD/EUR Conversion Rate Forecast to Soften as FOMC Decision Dominates Focus
This week will see trader focus dominated by the Federal Open Market Committee (FOMC) meeting on Wednesday. Although nearly every analyst predicts that policymakers will opt to hold rates at this juncture, there is a high chance that the accompanying press conference will cause significant US Dollar volatility. Many rate hawks are preparing for Fed Chair Janet Yellen to suggest that December will be the time for lift-off. Should that be the case the US Dollar will rally and recover some of the recent losses seen from uncertainties regarding the global economic outlook.
On Monday the US Dollar declined versus most of its major peers after New Home Sales contracted by -11.5% in September. With the FOMC rate decision looming, any disappointing economic data result is likely to have a pronounced impact on the US Dollar.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1001 today.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Decline on Central Bank Policy Divergence
Given that the Federal Reserve are attempting to time its first rate hike and the European Central Bank are considering when it would be appropriate to ease policy, the Euro to US Dollar (EUR/USD) exchange rate is likely to soften considerably in the long-term. Today is unlikely to see considerable EUR/USD volatility with trader focus dominated by Wednesday’s Fed interest rate decision. With that being said, however, any significant surprise in US data ahead of the decision (with special reference to Tuesday’s Durable Goods Orders and Consumer Confidence Data) could provoke significant volatility.
European economic data will be somewhat thin on the ground on Tuesday. This could see subdued trade for the common currency. However, given its negative correlation with the US Dollar any significant ‘Greenback’ (USD) movement will also provoke corresponding movement for the Euro.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1059 during Monday’s European session.
