EUR/USD Forecast Bearish for Euro to Dollar Exchange Rate on Weak US Unemployment Data

August 14, 2014 - Written by Tim Boyer

STORY LINK EUR/USD Forecast Bearish for Euro to Dollar Exchange Rate on Weak US Unemployment Data

Curreny News UK - The Euro to Dollar pair has seen an exchange rate market movement of 0.09% so far this session, trading between the confines of 1.3396 and 1.3346 EUR/USD.

The US Dollar however has dominated in the currency market, and looks continually forecast to remain bullish in comparison to other weaker majors such as the Euro.

Federal Reserve Becomes More Hawkish; Interest Rate Hikes Speculated.

- The euro to australian dollar exchange rate is 1.43776.
- The euro to pound exchange rate is 0.80285.
- The euro to dollar exchange rate is 1.34005.
- The dollar to euro exchange rate is 0.74624.

The Federal Reserve has taken a different tone in their statements of late, with Chairwoman Janet Yellen proving more hawkish than previously witnessed. Yellen however has very sternly stipulated that the Federal Reserve will not raise interest rates if the positive data regarding wages, unemployment and inflation do not continue.

Advance Retail Sales stumbled in the US data publications yesterday, showing less consumer spending in the US economy. Figures that had previously been forecast to reach 0.2%, were actualised at a flat 0.0%. Economist Diane Swonk stated: ‘It will provide Fed Chair Janet Yellen with some of the rationale she needs to justify why the Fed should move gradually and keep interest rates low for longer than hawks within the Fed would like.’

With some economists forecasting a rise in interest rates in the US next year, the US Dollar seems likely to remain in a sturdy position in the currency market. Market specialist Joe Manimbo commented: ‘The “Greenback” has now outperformed most rivals for months as improving US data keep the Federal Reserve on course to raise borrowing rates next year.’

Thursday however has seen the release of US Initial Jobless Claims figures which are higher than expected at 311K, instead of the more favourable forecast of 295K. Furthermore Continuing Claims figures also jumped away from the predicted 2500K reaching an unfavourable 2544K.

Eurozone Growth Falters as Influential Germany Stumbles on GDP Data

The Eurozone has seen a difficult day on Thursday with the publication of poor German Gross Domestic Product (GDP) statistics. GDP figures showed the German economy had contracted by 0.2% in the second quarter, which is a worry as Germany plays such a large role in the overall Eurozone figures. Germany can be used as an economic indicator for the overall health of the Eurozone and today’s GDP figures are suggesting consumer consumption and confidence are shrinking. Economist Peter Vanden Houte stated: ‘Today’s figures show that the upturn remains too weak to withstand external shocks meaning that GDP growth will probably remain stuck in stop-and-go mode.’

Eurozone Trading Amid Geopolitical Tensions Causes Volatility for the Euro

With the Eurozone and the US placing sanctions against Russia, Russia have hit back, restricting importations of produce from the EU. The Eurozone is expected to be hit hard with produce unable to be exported to its intended destination. Forex expert Alan Robinson stated: ‘We can see continued Euro weakness because of the geopolitical tension on its doorstep. However, geopolitical tension could dissipate quickly. And if that were to happen we might see a relief rally in the Euro.’

The Euro to Dollar exchange rate is likely to remain bearish which has recently conquered all other majors in the currency market exchange rates.

The US Dollar is extremely likely to continue on its rally higher as potentially the first of the developed nations to raise interest rates since the global financial crisis.

The Euro however, has the potential to sink, as recent figures indicated the Eurozone’s third largest economy Italy, is in a recession, and Germany appears to be severely underperforming.

The Eurozone as a whole may be subject to further unorthodox fiscal policy measures by the European Central Bank if the currently fragile recovery buckles.

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TAGS: American Dollar Forecasts Dollar Pound Forecasts Euro Forecasts