EUR/USD exchange rate flat despite upbeat German data
The euro US dollar (EUR/USD) exchange rate is trapped in a narrow range this morning following the publication of Germany’s latest GFK consumer confidence index.
At the time of writing, the EUR/USD exchange rate is trading at around €1.1140, virtually unchanged from this morning’s opening rate.
Euro (EUR) dips despite upbeat German data
The euro (EUR) is on the defensive against the majority of its peers this morning despite the publication of some unexpectedly positive economic data from within the Eurozone’s largest economy.
Germany’s latest GFK consumer confidence index showed a slight improvement for the upcoming month, rising from -21.9 to -21.2, surpassing the forecasted -21.5. However, this modest rise has had little effect on boosting the euro thus far, as it was viewed more as a “stabilization at a low level,” which has dampened confidence in the common currency.
Nuremberg Institute for Market Decisions (NIM) Consumer Expert Rolf Buerkl said:
‘After the severe setback in the previous month, the slight improvement in consumer climate can be interpreted more as a stabilization at a low level. The consumer climate has not improved since June 2024, when it hit -21 points. Therefore, the slight increase cannot be interpreted as the beginning of a noticeable recovery. The consumer sentiment is generally too unstable for that.’
Adding to the euro’s struggles is the return of a risk-on mood, with investors moving away from safe-haven currencies in favour of riskier assets.
US dollar (USD) hobbled by risk-on flows ahead of US data
The US dollar (USD) is struggling to garner investor attention this morning, and is dipping against the majority of its peers, stymied by this morning’s return to cheery trade.
As a safe-haven currency, this morning’s risk-on flows have soured safe-haven USD sentiment.
Investors may also be reluctant to place any aggressive bets ahead of some high impact domestic data later in the day.
Up first, the finalised US GDP reading for the second quarter of the year could lend the ‘greenback’ some marginal support should the data align with expectations.
However, with durable goods orders expected to decline while initial jobless claims are anticipated to rise, this could limit any potential USD gains.
EUR/USD forecast: Influx of Data to Drive Movement?
Looking ahead, the primary catalyst of movement for the euro US dollar exchange rate looking at tomorrow will likely be several data releases from both the US and the Eurozone.
Up first, the Eurozone is set to release its latest economic sentiment index for September, along with the finalised consumer confidence index for the month.
Economic sentiment is projected to decline slightly, with forecasts suggesting a dip from 96.6 to 96.5. If the data meets expectations and reflects a worsening outlook for the bloc’s economy, it could put pressure on the euro following the release.
However, the euro’s losses may be limited by the publication of the consumer confidence index, which is expected to rise from -13.5 to -12.9.
Turning to the US dollar, tomorrow afternoon will see the publication of Federal Reserve’s preferred measure of inflation, the year-on-year Core PCE price index.
As last month’s data is forecast to tick up from 2.6% to 2.7%, this could buoy USD exchange rates at the end of the week on the back of signs of sticky domestic inflation.
