US Dollar to Euro Exchange Rate (USD/EUR) hits two-month high

Modified: Monday, 20 January 2014 12:41 BST - Written by Ben Hughes

STORY LINK US Dollar to Euro Exchange Rate (USD/EUR) hits two-month high

The US Dollar to Euro exchange rate (USD/EUR) is trading at a two-month high as a recent run of positive data reports out of the world’s largest economy supported speculation that it is strong enough for the Federal Reserve to continue tapering its quantitative easing programme.

The US Dollar to Euro exchange rate is trading down -0.19% at 0.73785 USD/EUR. The Euro to US Dollar exchange rate is trading up +0.19% at 1.35529 EUR/USD.

The Dollar remains supported by last week’s reports which showed that the number of new building permits issued in the US remained close to a five-year high and retail sales earlier in the week came in above economist expectations.

“More people are leaning toward simply the fact that the Fed will taper and that is supporting the US Dollar. The US is committed to tapering, and they will. The recovery is sufficiently robust to allow that to happen,” said a senior economist.

The Euro on the other hand came under pressure from inflation data which continued to be subdued. Concerns remain high that the Eurozone could witness deflation if the European Central Bank doesn’t take firmer action. ECB President Mario Draghi tried to ease market concerns but his comments seem hollow following today’s disappointing PPI report out of Germany, the Eurozone’s largest economy.

Monday is very quiet in terms of data releases so not much movement is expected during the session.

Market sentiment found some support after data on Monday showed that China’s economy grew 7.7% in the fourth quarter from a year earlier, slowing from 7.8% in the previous quarter, but still above the 7.6% forecast by economists.

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