The Euro managed to ease away from a four-month low and regain some ground against the US Dollar on Monday after the International Monetary Fund lowered its growth forecast for the US economy.
Further gains for the Euro are unlikely as the single currency remains under pressure after the European Central Bank eased monetary policy earlier this month.
The currency was also under pressure from the release of data which showed that inflation in the Eurozone fell by 0.1% in May.
The figure marked the lowest inflation rate since 2009 and was well below the ECB’s target of just under 2%.
The ‘Greenback’ weakened despite better than forecast manufacturing and industrial production data as the International Monetary Fund cut its 2014 growth forecast for the US economy.
It said that the unusually harsh winter, along with a soft housing market was acting as a drag on growth.
The Euro to USD is currently trading at 1.3566 – 16/08/14
The IMF said that it expects the world’s largest economy to expand by 2% this year instead of it’s previously forecast figure of 2.8%.
“Recent data … suggest a meaningful rebound in activity is now underway and growth for the remainder of this year and 2015 should well exceed potential, given the substantial economic slack in the economy, there is a strong case to provide continued policy support,” the IMF said.
The comments disappointed investors who now expect the Federal Reserve to leave interest rates close to 0%.
Tomorrow sees the release of the latest ZEW Economic sentiment Index data for Germany and the wider Eurozone. A fall in sentiment is likely to put the single currency back on the back foot against the US Dollar.
Investors will also be watching events in Ukraine and Iraq as further escalations in those hotspots is likely to increase demand for safe haven assets at the expense of the Euro.
Euro Exchange Rate News:
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