At the start of last week the Euro tumbled against all of its most traded peers after the European Union announced that it had cut its growth forecasts for the rest of the year and 2014.
The Euro was broadly weakened after the EU cut its growth forecast from its initial estimate of 1.2% in 2014 to 1.1% and increased its expectations for unemployment in the region to climb to 12.2% instead of its previous prediction of 12.1%.
Despite the cut in growth forecasts the Euro managed to rally later in Monday’s session against the US Dollar as investors raised their expectations that European Central Bank policy makers would choose to refrain from cutting interest rates when policy makers met in the week and after traders said that the currency’s fall was too rapid.
Mid-week the Euro jumped against the Pound and was higher against the majority of its peers after German factory orders increased by a bigger than expected margin in September. Orders soared by 3.3% from August when they fell by 0.3%, smashing economist forecasts for a gain of 0.5%. The data relieved some concerns that the Eurozone recovery is slowing after other data released earlier in the session widely disappointed.
The Euro held onto Wednesday’s gains as investors took a wait and see approach to the scheduled policy statement from the European Central Bank. Most economists were predicting that the ECB would choose to refrain from cutting interest rates as they feel the region’s economy is not yet weak enough to warrant such action. They were wrong.
The Single currency went into freefall making its biggest decline in two years against the US Dollar and a ten-month low against the Pound after the ECB surprised investors by cutting interest rates from the already record low level of 0.5% to 0.25%. The Euro received further hits as the week drew to a close after France saw its sovereign credit rating cut by Standard & Poor’s.
Looking ahead to this week the Euro looks likely to remain under heavy pressure. Data out of Portugal on Monday came in worse-than-forecast and speculation grows that the US Federal Reserve could choose to taper its monetary easing programme sooner-than-expected following the release of a number of positive US data releases.
The single currency could relieve some pressure if this week’s data releases come in better-than-forecast. If investors see that the regions recovery is continuing then confidence will grow, if not then the currency is likely to weaken further as investors will turn to safer currencies such as the US Dollar and Sterling.
Euro (EUR) Exchange Rates
As of 11:30 am GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3393
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8377
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4304
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6228
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4027
The Euro/ Japanese Yen Rate Exchange Rate is currently in the region of: 132.8483
The Euro/Swiss Franc Exchange Rate is currently in the region of: 1.2319
The Pound Sterling/ Euro Exchange Rate is currently in the region of: 1.1935
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7465
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6989
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6161
The Canadian Dollar/Euro Exchange Rate is currently in the region of: 0.7129
Swiss Franc/Euro Exchange Rate is currently in the region of: 0.8117