Euro to Dollar Exchange Rate Dips as Markets Await Jackson Hole Summit | Euro Exchange Rate Forecasts

August 21, 2017 - Written by John Cameron

STORY LINK Euro to Dollar Exchange Rate Dips as Markets Await Jackson Hole Summit | Euro Exchange Rate Forecasts

The Euro (EUR) stumbled slightly against the US Dollar (USD) this morning as markets eagerly await the central bank summit in Jackson Hole in the US later this week.

Euro (EUR) Slips as Draghi Expected to Avoid Policy Talk

The Euro stumbled at the start of this week’s session as recent comments from European Central Bank (ECB) sources suggest that ECB President Mario Draghi will not be mentioning the bank’s monetary policy when he speaks in Jackson Hole later this week.

Markets had previous hoped that Draghi may have discussed the possible tapering of the bank’s quantitative easing programme, with the bank’s current round of bond buying set to end at the start of 2018.

Michael Hewson, chief market analyst at CMC Markets UK, said;

‘The scope for surprises was diminished somewhat by ECB sources at the end of last week when it was reported the ECB president Mario Draghi would not be making any comment on monetary policy when he speaks later this week.’

Hewson suggests this may have something to do with the bank’s recent concerns that the strength of the Euro is hampering efforts to increase inflationary pressure in the Eurozone, adding;

‘This reticence to comment may also have something to do with the fact that there appears to some concern on the governing council about an overshoot to the upside for the euro, particularly given the recent weakness of the US dollar.’

With Draghi unlikely to deliver any surprises this week most investors will instead be looking towards the Federal Reserve for updates on its monetary policy, with Fed Chair Janet Yellen expected to discuss the bank’s plans to reduce its balance sheets and possibly signal that a third rate hike is still on the table for later in the year.

Possibly US North Korean Tensions Weigh on US Dollar (USD)

Meanwhile despite optimism over Yellen’s upcoming speech at the Jackson Hole summit, the US Dollar’s advance remains tempered by political concerns.

While tensions between the White House and Congress appear to have eased following the departure of senior White House adviser Stephen Bannon over the weekend, markets still fear that the Donald Trump’s response to violence in Charlottesville has caused him to become politically isolated himself from his own party, prompting doubts over whether he holds enough political capital to pass his ambitious spending plans and tax reforms.

Adding to this are concerns that tensions with North Korea could flare again this week as the US holds military exercises with South Korea, with Pyongyang frequently criticising the exercises which it claims is preparation for an invasion.

Craig Erlam, senior market analyst at Oanda, said;

‘Geopolitical risk could rear its ugly head again this week as the US and South Korea begin planned military exercises on Monday, just as tensions between the North and these two countries appear to have calmed. Should North Korea respond in kind, then we could see a repeat of the safe haven rush from a couple of weeks ago when the situation previously flared up between the countries.’

EUR USD Exchange Rate Forecast: German Economic Confidence to Slide?

Looking ahead on the data front the EUR USD exchange rate is likely to slide further on Tuesday as Germany’s releases its latest Economic Sentiment figures.

Economists forecast that the index will have slipped from 17.5 to 15 in August as the recent slowdown in economic activity in the country will have caused a dip in confidence.

Meanwhile the US Dollar may also struggle tomorrow as analysts forecast that the Richmond Fed Manufacturing Index will have slumped from 14 to 9 in August.

Current Interbank Euro (EUR) Exchange Rates

At the time of writing the EUR USD exchange rate was trending around 1.1746 and the USD EUR exchange rate was trending around 0.8511.

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