Euro Rate Today - EUR/USD Exchange Rate Falls Further, EUR/GBP Holds Firm

September 25, 2014 - Written by James Fuller

STORY LINK Euro Rate Today - EUR/USD Exchange Rate Falls Further, EUR/GBP Holds Firm

The Euro to US Dollar (EUR/USD) exchange rate has been falling as the week progressed, as investors price in the prospect of interest rate hikes in the US economy. The US Dollar gauge has achieved a four-year high on Thursday as the Federal Reserve appears to be the most likely amongst the Group of Seven nations to hike interest rates. The Euro, however, is currently residing near a two-year low. Thursday has been an interesting day for the EUR to USD exchange rate, with both currencies responding to influential events.

Euro Exchange Rate Altered by Draghi Comments

European Central Bank President Mario Draghi has recently stated that the ECB would use any methods necessary to boost the Eurozone recovery. Speculation has mounted that the ECB will be forced to undertake a period of quantitative easing (QE), a measure of bond buying that the central bank has so far avoided introducing since the onset of the global financial crisis. However, hopes of QE have heightened again after Draghi stated that the ECB would adjust ‘the size or composition of our unconventional interventions should it become necessary.’

The Eurozone has experienced consistently low inflationary levels, causing some to believe that deflation could occur in the near future. However, Draghi has commented that low inflationary levels are expected to persist until 2015. Draghi continued: ‘While inflation expectations have declined, particularly at shorter maturities, our measures will underpin the firm anchoring of inflation expectations in line with our aim of maintaining inflation rates below, but close to 2%.’

US Dollar Could Rally from Favourable Data

The US Dollar has remained popular in the forex market in recent weeks as favourable data spurred interest rate hike speculation. The US Dollar has been further bolstered by Federal Reserve Presidents making hawkish statements suggesting interest rate hikes should occur in the near future. US domestic data seems to have taken a slight downturn of late, with figures failing to impress. However, Thursday’s figures may inspire investor sentiment in the ‘Buck’; Continuing Claims figures slipped lower than expected to 2439K, slightly less than the forecast 2440K. US Durables Goods Orders slipped in August and were reported at -18.2%, although economists had expected an 18% contraction in August following July’s extremely favourable statistic. July had seen record highs for aircraft purchases that surprised economists’ predictions. On another positive note for the ‘Greenback’, Initial Jobless Claims came in slightly lower than the forecast 296K, with the actual figure only reaching 293K.

In the latter half of Thursday US Composite and Services PMI will be published and may offer further support for the US Dollar. Friday will be another influential day for the ‘Greenback’ with the publication of US Gross Domestic Product numbers and the University of Michigan Confidence Index. The Euro may also be subject to fluctuations on Friday with the release of German Consumer Confidence and ECB official Luc Coene speaking in Brussels. Furthermore, Saturday will see the publication of Eurozone Retail Sales statistics which may offer the Euro some support. In light of current geopolitical tensions, any escalations in global politics may also alter the EUR to USD exchange rate.

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TAGS: Euro Forecasts