Euro Exchange Rate Today - EUR to Dollar Forecast to Remain Under Pressure

Modified: Thursday, 26 June 2014 19:53 BST - Written by Ben Hughes

STORY LINK Euro Exchange Rate Today - EUR to Dollar Forecast to Remain Under Pressure

The Euro was softer against the US Dollar on Thursday as demand for safe haven exchange rates was heightened by events in Iraq and as the tentative ceasefire in Ukraine looks set to fail as fighting continued in the east of the country.

Adding to concerns over the European economy were further signals from Western leaders that they would impose further sanctions upon Russia if it continues to provide support for the pro-Russian separatists, a charge that Russian President Vladimir Putin denies.

Hopes had risen earlier in the week that a diplomatic solution to the crisis which has left hundreds dead in heavy fighting between Ukrainian government forces and Pro-Russian Separatists was close.

Mr Putin requested that the Russian parliament revoked an order which authorised Russia to take military action inside Ukraine’s borders should ethnic Russians come under threat.

That move is now being widely seen as just a way for Putin to try and stall further sanctions being imposed.

The German Chancellor, Angela Merkel, said that rescinding the order was an “important psychological point”, but urged the Kremlin to speed up its intervention. “Diplomatic solutions are always preferable but if nothing else works, sanctions could return to the daily agenda, and this time at the third level,” she told parliament, referring to sanctions targeting key economic sectors.

The ceasefire announced by the Kiev based government and the rebels were thrown into doubt after the rebels shot down a government chopper, killing all nine personnel on board.

The Ukrainian situation is a particular headache for the Eurozone’s largest economy, Germany. Many German businesses operate within Russia so the tensions between the West and Russia can have a negative impact upon business.


A recent business sentiment report for the country showed that confidence has fallen as a result of the crisis.

Data released early in today’s session offered some support to the Euro after it showed that French consumer confidence inched higher in June as households became more confident about their finances.

The rise was unexpected seeing as how most recent French data has disappointed. Consumer confidence rose to 86 in June from 85 in May, according to the monthly survey by national statistics agency Insee.

The US Dollar meanwhile was being weighed upon by the release of yesterday’s data which showed that the world’s largest economy contracted sharply in the first quarter of the year as the harsh winter weather had a negative impact upon the economy.

The US Commerce Department showed that gross domestic product contracted by 2.9% in the first three months of the year, far worse than the 1.7% decline expected by economists. The data also showed that the difference between the data second and third estimates was the largest seen since records began in 1976.

The disappointing data caused the ‘Greenback’ to fall against the majority of its most traded peers and to give up its gains against the Australian Dollar. The Pound was also trading higher against the US currency.

The UK currency advanced as investors looked ahead to today’s Bank of England Financial stability report. Traders are expecting that the Bank will reveal a clampdown upon the UK’s housing market in order to prevent an overheating of the market.

"The devil will be in the detail but the rule of thumb is that the tighter macro prudential policy becomes, the looser the margin that conventional monetary policy can be, i.e. interest rates might not have to be raised quite as early or aggressively as they would have otherwise been," Said Paul Robson a currency strategist at RBS Global Banking.

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