EUR/USD Exchange Rate Rises as German Import Prices Increase
The Euro to US Dollar (EUR/USD) exchange rate edged higher today, with the pairing currently trading around $1.17.
The Euro (EUR) edged higher against the US Dollar (USD) today as USD investors await this evening’s interest rate decision rom the Federal Reserve. Although the Fed is expected to hold rates at 0.25%, investors expect the Bank to be notably dovish in its monetary policy statement.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said:
‘The Fed is not expected to bring any significant changes to its policy stance at this month’s meeting. US policymakers will likely emphasise the lingering risks on the US economy and maintain an ultra-supportive monetary policy to provide support to its economy ravaged by the pandemic.’
In Eurozone economic news, today saw the release of the latest German Import Price Index for June, which beat forecasts and rose from 0.3% to 0.6%. As a result, EUR investors have become more optimistic for the Eurozone’s powerhouse economy’s recovery.
Today also saw the release of the French Consumer Confidence for July, which fell below forecasts from 96 to 94.
US Dollar (USD) Sinks Ahead of Fed Interest Rate Decision
The US Dollar (USD) struggled today as investors have become weary of the ‘Greenback’ ahead of today’s Federal Reserve interest rate decision.
Rick Rieder, BlackRock chief investment officer of global fixed income, speculated on the Fed’s monetary policy statement, saying:
‘I think they are going to continue to err on the side of doing more rather than doing less. They are going to continue to emphasize the uncertainty.’
In US economic news, today saw the release of the latest US Pending Home Sales for June, which beat forecasts at 16.6% month-on-month. However, with USD investors remaining overall pessimistic about the American economy, this did little to improve sentiment in the ‘Greenback’.
Economists at Bloomberg, Andrew Husby, Eliza Winger and Yelena Shulyatyeva, were downbeat in their forecasts for the US economy:
‘Lockdowns enforced in March through April led to a plunge in consumer spending. As restrictions lifted, the initial recovery was rapid, but will remain partial amid a resurgence of virus cases and orders to pause or reverse reopening plans.’
EUR/USD Outlook: Could Weak US GDP Buoy Safe-Haven Demand for ‘Greenback’?
Euro (EUR) investors will be awaiting tomorrow’s release of the preliminary German GDP figures for the second quarter. If these confirm forecasts and fall by -9%, then we could see the single currency suffer.
Tomorrow will also see the flash German Harmonised Index of Consumer Prices for July, with the figure set to ease from 0.8% to 0.4%. As a rest, we could see the EUR suffer.
US Dollar (USD) investors will also be awaiting tomorrow’s flash US GDP figure for the second quarter. If this confirms forecasts and plummets to -34.1%, then we could see the ‘Greenback’ benefit from safe-haven demand as the world’s largest economy struggles.