EUR/USD exchange rate flat despite forecast beating German data
The euro US dollar (EUR/USD) exchange rate is trapped in a narrow range this morning despite the publication of some better-than-expected domestic data from Germany.
At the time of writing, the EUR/USD exchange rate is trading at around €1.0907, virtually unchanged from this morning’s opening rate.
Euro (EUR) unmoved by better-than-expected German data
The euro (EUR) is trending largely flat this morning despite the publication of some forecast beating economic data from the Eurozone’s largest economy.
The latest ZEW economic sentiment index rose from 3.6 to 13.1 this month, marginally ahead a more modest 10 expectation.
ZEW President Prof. Achim Wambach, PhD commented:
‘Starting from a very poor assessment of the current situation, economic expectations for Germany are rising in the current survey. This is due to the expectation of stable inflation rates and the associated prospect of further interest rate cuts by the ECB.
The increased optimism for China is likely to be related to the economic stimulus measures taken by the Chinese government. These developments are also likely to have contributed to the increased economic expectations for Germany.’
However, as the latest index remained low and marked the second lowest reading of the year so far, the data failed to bolster EUR exchange rates accordingly.
US dollar (USD) underpinned by risk-off mood
The US dollar (USD) is drawing modest support from today’s cautious market mood amid a lack of any economic drivers.
With Middle East tensions flaring and disappointing Chinese economic data, investors are favouring safe-haven assets today.
However, USD investors might be hesitant to make aggressive moves on the ‘greenback’ ahead of a number of upcoming speeches from Federal Reserve officials.
Any dovish remarks could bolster expectations of a rate cut and weigh on the US dollar as a result.
EUR/USD forecast: ECB speech in the spotlight?
Looking ahead, the primary catalyst of movement for the euro US dollar exchange rate looking ahead to tomorrow will likely be a speech from the European Central Banks (ECB) President Christine Lagarde.
With just two days to go before the ECB will enact its latest interest rate decision, any dovish commentary from the central banks President could see a rise in ECB rate cut bets and in turn hobble the common currency.
As for the US dollar, tomorrow will see a continued lack of economic data, which could see the ‘greenback’ move mostly in response to risk sentiment.