EUR/USD Exchange Rate Falls despite Rising Fears that US Fed Could Cut Interest Rate
The Euro US Dollar (EUR/USD) exchange rate held fell today and is currently trading around $1.1323 on the interbank market.
The US Dollar (USD) rose against the Euro (EUR) despite the printing of the US inflation data, with the monthly figures slipping below the consensus increase of 0.2% to 0.1%.
Annual consumer price index figures, meanwhile, eased at 2.0% despite their 2.1% forecast increase.
USD traders have become increasingly jittery, however, as this bolsters the case for the Federal Reserve to cut its interest rate.
US-China trade tensions have weighed on USD investor confidence, with the two superpowers’ relationship souring yesterday as China has threatened to put forward Taiwan as a ‘chess piece’ in future negotiations.
Zhiqun Zhu, a Professor of Political Science and International Relations at Bucknell University, commented:
‘Taiwan’s value to the U.S. will only increase as tensions between the U.S. and China escalate.’
Today also saw the printing of the US MBA mortgage applications figures for Jun, which shot up to 26.8%, providing some uplift for the ‘Greenback’.
EUR/USD Exchange Rate Falls as Draghi Warns of Global Trade Woes
The Euro, meanwhile, fell following the publication of the Spanish inflation rate figures for May, which held steady at 0.2%.
Today saw the President of the European Central Bank (ECB), Mario Draghi, deliver a speech in which he pointed out that Central Europe is particularly vulnerable to the ongoing US-China trade war.
Mr Draghi commented:
‘The central and eastern European business model has become vulnerable to shocks to international trade and financial conditions. The effect of tariffs could be amplified, as a large share of goods cross borders multiple times during the production process.’
This has left some Euro traders feeling jittery as global trade tensions have exacerbated over the last few days.
EUR/USD Forecast: Euro Could Benefit from Safe-Haven if US-China Trade Tensions Ease
Euro traders will be looking ahead to tomorrow’s printing of the German harmonized index of consumer prices, and with any signs of an increase, this could buoy the EUR/USD exchange rate.
Tomorrow will also see the publication of the Eurozone’s industrial production figures for April, which, however, are expected to decrease.
US Dollar investors, meanwhile, will be awaiting tomorrow’s initial jobless claims figures for June, which are expected to improve.
These will be followed by the US continuing jobless claims figures for May.
The EUR/USD exchange rate will likely be driven by global political developments for the rest of the week, and with any signs of an easing relationship between the US and China, this could see the Euro benefit from its safe-haven status.
