Indications that the European Central Bank is pushing for a lower domestic currency weighed on the Euro for much of the local session.
The Euro fluctuated against some of its most traded currency counterparts after ECB President Mario Draghi stated that a weaker Euro would help lift inflation pressures.
However, as North American trading opened and US data was published the Euro recovered ground against the ‘Greenback’.
The EUR/USD pairing advanced in response to a report showing an unexpected decline in US consumer sentiment.
Economists had forecast that the University of Michigan measure would advance from 81.6 in February to 82.0 in March, but bad weather and January’s disappointing jobs figures pushed the sentiment gauge to its lowest level for four months.
The reading was disappointing and indicates that consumers are adopting a more pessimistic outlook.
However, in recent weeks the employment situation has improved and the Federal Reserve has reasserted its commitment to keeping interest rates low while it tapers stimulus.
This week’s better-than-forecast US retail sales figure also implies that consumer demand is faring well.
Richard Curtin, director of the University of Michigan survey, commented; ‘Overall, consumers continued to demonstrate their resilience in the face of a long and harsh winter, and have not recognised any implications for the domestic economy from the Russian incursion into Ukraine.’
Tensions surrounding the Ukraine situation also kept the safe-haven US Dollar supported.
On Sunday a referendum will be held to determine whether Crimea’s allegiance will be to Russia or Ukraine.
Whatever the result of the vote there are sure to be fireworks and lower-risk assets like the US Dollar will be in high demand.
Next week a succession of influential economic reports for the Eurozone, including consumer sentiment, inflation and trade balance, will influence the direction taken by the EUR/USD exchange rate.
Of course, investors will also be paying particular attention to the Federal Open Market Committee’s monthly policy statement.
If the central bank hints at any slowing in the tapering of stimulus the ‘Greenback’ could fall, but proof that the Fed is sticking to its guns could lend the US Dollar underlying support.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3925,
Euro,,British Pound,0.8378,
Euro,,Australian Dollar,1.5408,
Euro,,New Zealand Dollar,1.6260,
Euro,,Canadian Dollar,1.5431,
[/table]
