EUR to USD Exchange Rate Calmer Ahead of Friday?s Key Data

May 11, 2017 - Written by Frank Davies

STORY LINK EUR to USD Exchange Rate Calmer Ahead of Friday?s Key Data

Thursday finally saw the Euro recover slightly after being sold in profit-taking for most of the week. The Euro to US Dollar exchange rate has also benefitted from decent Eurozone data and US political jitters.

After Sunday’s election of pro-EU Emmanuel Macron as the next President of France, EUR/USD briefly jumped to a high of 1.1022 at the beginning of the week. However, EUR/USD has tumbled since then, hitting a low of 1.0855 on Wednesday before edging away from this low.

While markets reacted with optimism to Macron’s election as French President and the decisive defeat of anti-EU Marine Le Pen, they opted to sell the Euro from its recent highs in profit-taking rather than buy further into the shared currency.

This is because markets had largely priced in a Macron victory following his strong performance in the first round of the election and TV debates.

Wednesday’s dovish comments from European Central Bank (ECB) President Mario Draghi also weighed on Euro demand.

After the French election stabilised the Eurozone outlook, more traders had been hoping Draghi would take on a more hawkish tone.

However, Draghi largely defended the ECB’s ultra-loose monetary policy and continued to indicate it would be in place until Eurozone inflation was able to support itself without stimulus.

On the other hand, this week’s Eurozone data has been solid so far and has continued the recent trend of better-than-expected Eurozone ecostats. Wednesday’s French trade deficit and industrial production stats from France and Italy all beat expectations.

The US Dollar has performed decently for most of the week despite political jitters rising once again. This has been largely due to an increase in bets that the Federal Reserve will hike US interest rates in June. June rate hike bets are currently over 85%.

This week’s US data has had little influence on the US Dollar so far, with investors mostly focusing on Fed rate hike bets and the surprising news that US President Donald Trump had fired FBI Director James Comey.
Comey’s firing came as a shock to markets, with some investors hedging against or selling the US Dollar on speculation that things may become even more difficult for the US President from here on.

Despite US Dollar weakness, EUR/USD remains well below the week’s opening levels and is likely to register losses this week unless Friday’s data boosts the pair considerably.

Friday will see the publication of Germany’s highly anticipated preliminary Q1 Gross Domestic Product (GDP) results, as well as the nation’s final April Consumer Price Index (CPI) stats. If they beat expectations the Euro is likely to increase. Eurozone industrial production data from March will also be published.

Highly influential US data will also be published on Friday, including April’s US inflation results and retail sales figures.

Michigan University’s May consumer sentiment surveys may also influence USD on Friday afternoon but these results would all need to be disappointing for EUR/USD to have a chance of a Friday recovery.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Euro Forecasts