EUR/USD exchange rate flat ahead of Eurozone data
The euro US dollar (EUR/USD) exchange rate is trading mostly flat this morning as markets await the publication of the latest consumer confidence index from the Eurozone.
At the time of writing, the EUR/USD exchange rate is trading at around €1.0871, virtually unchanged from this morning’s opening rate.
Euro (EUR) rangebound ahead of data release
The euro (EUR) is trapped in a narrow range against the majority of its peers this morning as investors await the Eurozone’s preliminary consumer confidence index for July.
Expected later this afternoon, the latest consumer confidence index is forecast to report a slight uptick in July’s reading which could lend the common currency some modest support should the data show signs of improving consumer morale.
Elsewhere, this morning’s cautious trade has failed to underpin the Euro despite its nature as a safe-haven currency, keeping EUR exchange rates listless.
US dollar (USD) muted amid lack of data
The US dollar (USD) is struggling to garner investor attention this morning as US data releases are thin on the ground, causing the ‘greenback’ to trade without a clear direction.
However, weighing on USD exchange rates this morning are continued Federal Reserve interest rate cut bets, with the CME’s FedWatch Tool now pricing in an almost 98% chance that the central bank will begin loosening its monetary policy in September.
This recent rise in Fed rate cut bets are largely attributed to signs of cooling domestic inflation alongside a dovish tilt from the central bank’s President and its officials.
An excerpt from a review led by economists Matthew Luzzetti and Amy Yang, reads:
‘We put substantial weight on Powell’s recent comments, which clearly skew in a dovish direction relative to many of his colleagues.’
Elsewhere, similarly to the euro, risk-off flows are also failing to bolster the US dollar this morning, despite its status as a safe-haven currency.
EUR/USD forecast: PMIs in the spotlight
Looking past the Eurozone’s consumer confidence index this afternoon, the primary catalyst of movement for the euro US dollar exchange rate will likely be the publication of both US and Eurozone preliminary PMIs.
Scheduled for release tomorrow, the US index is forecast to show that both the services and manufacturing sectors continued to grow, which could support the ‘Greenback’ in mid-week trade.
Turning to the Eurozone, the latest PMIs are expected to report a mixed reading.
Although the services sector is forecast to expand, the manufacturing index is expected to remain in contraction territory (a reading below 50) which could hobble EUR exchange rates in the wake of the release.
Also scheduled for release tomorrow is Germany’s latest GFK consumer confidence index. As the data is forecast to rise, could this underpin the common currency?
