The Euro to US Dollar (EUR/USD) exchange rate has continued to fall today, making a greater -0.5% loss in the pairing.
This deterioration comes from trader worries about the expiration of a negotiation period on steel tariffs between the US and the EU.
A number of nations were granted temporary exemptions from the US-based tariffs while they negotiated a more permanent arrangement.
Only South Korea has secured a permanent deal, however, so the fear is that Eurozone steel producers could suffer after the deadline on 1st May.
(First published 30th April, 2018)
Gloomy Eurozone GDP Growth Prediction Triggers EUR/USD Exchange Rate Losses
The Euro (EUR) has fallen by -0.4% against the US Dollar (USD) today, as poor Eurozone data has combined with pessimistic forecasts.
In the former case, monthly German retail sales activity in March has disappointed, slowing by -0.6%. This is the fourth slowdown in as many months.
In the latter, there are concerns that upcoming Eurozone GDP and inflation rate figures could show Euro-damaging slowdowns in 2018.
US Dollar to Euro (USD/EUR) Exchange Rate Rises on ‘Above-Potential’ Growth Forecast
On a better day for USD traders, the US Dollar to Euro (USD/EUR) exchange rate has risen thanks to an optimistic economic forecast from Nomura.
Analysts have observed that;
‘Job gains remain well above the long-term sustainable pace and will likely continue to push down the unemployment rate to levels not seen since 2001’.
The message was not completely free of warnings, however, with Nomura experts also stating that;
‘Productivity growth remains soft, held down by structural declines in underlying business dynamism. The lower dynamism also places downward pressure on wage growth’.
Euro to US Dollar Exchange Rate Forecast: Are EUR/USD Losses ahead on Eurozone GDP Slowdown?
The Euro’s (EUR) recent decline against the US Dollar (USD) may be only the tip of the iceberg, as greater losses could be caused by this week’s GDP and inflation data.
GDP growth rate estimates for Q1 2018 will be released on 2nd May and are expected to show slowing year-on-year and quarter-on-quarter readings.
Falling levels of GDP growth could result in the Euro to US Dollar (EUR/USD) exchange rate dropping sharply on such a poor start to 2018.
The situation could worsen on 3rd May, if inflation rate estimates for April also show forecast-matching declines or stagnation.
Both the GDP and inflation rate data will be considered in the context of whether it could lead to monetary policy tightening at the European Central Bank (ECB).
ECB policymakers have maintained a cautious outlook when it comes to policy adjustment and poor GDP and inflation estimates are unlikely to change this.
Chance of Greater US Dollar to Euro (USD/EUR) Exchange Rate Gains on Personal Spending Stats
Domestic data could be more positive for US Dollar traders this week, starting with this afternoon’s personal spending reading for March.
Levels of consumer spending are tipped to have risen during the month from 0.2% to 0.4%.
Higher spending can have a broad positive effect on US economic growth, from supporting the retail sector to ultimately boosting levels of GDP growth.
If the imminent consumer spending figure shows forecast-beating levels of growth then the US Dollar to Euro (USD/EUR) exchange rate could rise further.