EUR/USD Conversion Rate Predicted to Hold Steady after HSBC Predict Euro Uptrend
The Euro to US Dollar (EUR/USD) exchange rate was trending within a narrow range on Tuesday afternoon.
In the early stages of Tuesday’s European session the shared currency was trending lower versus its major peers. This was mainly due to traders concerned about overvaluation after negative correlation with the US Dollar prompted an overnight rally. Concerns regarding the Volkswagen scandal and the potential impact that will have on Germany and the Eurozone as a whole also weighed on investor confidence.
Despite the potential for a huge upset if it transpires that the German automotive industry will be unable to recover fully from the scandal, the common currency advanced versus many of its major peers as Tuesday’s European session progressed. This was due to heightened speculation that the European Central Bank will refrain from expanding quantitative easing in the near-term. ‘For me, it is too early already to talk about concrete measures about broadening QE,’ ECB Executive Board member Sabine Lautenschlaeger told reporters in Milan Monday.
David Bloom, the global head of currency strategy at HSBC stated; ‘If they attempt to get the currency down through additional quantitative easing, we think that’s going to be quite difficult. Don’t be surprised, the Euro has legs. QE has driven the euro from $1.40 to $1.05. Now it’s kind of waning, it’ll go back to $1.20.’
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1237.
USD/EUR Spot Commercial Rate Predicted to Trend Statically despite Drop in Shanghai Composite Index
The US Dollar softened versus many of its currency rivals in the opening stages of Tuesday’s European session. This was due to the fact that the Shanghai Composite Index ended the Asian session 2% down; prompting speculation that the Federal Reserve will continue to shy away from hawkish policy in the face of China’s economic slowdown. Mixed messages from Federal Reserve officials also weighed on sentiment towards the ‘Greenback’ (USD).
However, after domestic data produced mixed results erring towards positivity, the US asset advanced versus its currency competitors. One particularly surprising result was September’s Consumer Confidence which advanced from 101.3 to 103; completely eclipsing the market consensus of a drop to 97.0. It is fair to say, however, that the report was conducted before the VW scandal and prior to increased concerns surrounding China.
The Euro to US Dollar (EUR/USD) exchange rate dropped to a low of 1.1192 today.
Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Advance on Negative Correlation
Despite a lack of further domestic data publications to provoke changes, there is a likelihood that the EUR/USD exchange rate will decline as the North American session progresses. This is due to EUR/USD negative correlation and the fact that several economists expect the Euro to strengthen after QE weakened the common currency’s market value considerably. Wednesday will see significant EUR/USD volatility with several influential economic data publications due for release. Of particular significance will be Eurozone inflation data and German labour market data. US mortgages data may also impact on US Dollar movement.
The Euro to US Dollar (EUR/USD) exchange rate climbed to a high of 1.1281 during Tuesday’s European session.