Euro US Dollar (EUR/USD) Rangebound amid Bleak German Data

The Euro US Dollar (EUR/USD) exchange rate is moving without a clear trajectory this morning amid downbeat German data and an increasing appetite for risk.

At the time of writing the EUR/USD exchange rate is trading at $1.0852, virtually unchanged from this morning’s opening rate.

Euro (EUR) wavers as German Economic Concerns Persist

The Euro (EUR) is rangebound this morning as Germany’s economic concerns weigh on the common currency.

The latest GfK consumer sentiment reported a minor increase to -29 in March’s figures, up from February’s revised figure of -29.6. Though reporting a marginal improvement, the index showed that economic optimism remains incredibly weak within the Eurozone’s largest economy, stagnating near multi-month lows.

Rolf Buerkl, Consumer Expert at the NIM, commented:

‘There is great uncertainty among consumers. In addition to the constantly rising prices, the weaker economic forecasts for the German economy this year are likely to be another important reason for this. For the time being, Germany must continue to wait for an economic recovery.’

Serving to cushion EUR’s downside this morning, however, is recent commentary from European Central Bank (ECB) President Christine Lagarde. Following Lagarde’s notably hawkish rhetoric during a speech last night, continued push back from senior ECB policymakers may continue to buoy EUR as the session continues.

US Dollar (USD) Subdued ahead of Key Data

The US Dollar (USD) is changeable this morning ahead of impactful US releases later today.

Additionally, an increasing appetite for risk throughout the morning is serving to stymie any significant movement for the safe-haven ‘Greenback’.

While this afternoon’s data is set to disappoint, reporting a decline in durable goods orders, USD sentiment could remain upbeat as the Federal Reserve deliver an increasingly hawkish narrative surrounding monetary policy.

The CME FedWatch Tool reports the odds of a March interest rate hold to be at 99.5%, while markets and economists alike speculate that the Fed will maintain its ‘higher for longer’ approach towards interest rates as further inflationary data is awaited.

Pound Euro exchange rate forecast: Durable Goods Order to Dent the US Dollar?

Looking ahead, durable goods orders in the US are set to have declined by 4.5% in January. Decreased economic output could serve to undermine the ‘Greenback’. However, the Fed’s firmly hawkish consensus could serve to mitigate some of USD’s losses.

Tomorrow, US GDP is forecast to report 3.3% expansion during the fourth quarter. An upbeat score within the second estimate likely to see the US Dollar rebound.  

Looking to the Eurozone, on Thursday economists expect to see German retail sales expand by 0.5% in January’s data. Should the data print as expected, the Euro may garner some investor interest amid signs of increased consumer activity.

However, an expected easing of German inflation could then cap EUR’s upside later in the day. The CPI is expected at 2.6% in February, down from January’s 2.9%. Cooling inflation could be seen as a precursor to wider inflationary falls in the Euro area. This in turn may serve to boost ECB rate cut bets, and dent the Euro.