Euro Exchange Rate Today: Euro to Dollar Exchange Rate Fell After ECB Decision BUT Trends Higher

Modified: Saturday, 9 August 2014 21:47 BST - Written by James Fuller

STORY LINK Euro Exchange Rate Today: Euro to Dollar Exchange Rate Fell After ECB Decision BUT Trends Higher

Euro Rate Today: The Euro had another session in which it found itself under pressure against the US Dollar on Thursday as positive data buoyed the American currency.

Early in the session, the single currency came under pressure after a report showed that German industrial production increased below expectations in June, highlighting concerns that the standoff between the West and Russia is having a negative impact upon the Eurozone’s largest economy.

According the German Economy Ministry, factory production increased by just 0.3% in June, a figure that was well below economist forecasts for an increase of 1.3%. The data added to other data, which showed that showed an unexpected sharp decline in German factory orders. The disappointing figures increased worries that the nation’s economy could even have contracted in the second quarter of the year.

Germany has been the anchor of growth for the Eurozone in recent years, and with its output, accounting for 30% of the Eurozone's gross domestic product it will be difficult for the bloc's uneven recovery to gain much traction. Despite the rise in German GDP during the first quarter, the Euro zone as a whole only managed 0.8% growth at an annual rate, or 0.2% from the previous quarter.

A run of weaker than forecast reports out of the Eurozone has damaged sentiment towards the single currency. Yesterday saw a report confirm that Italy once again slid into recession.

Geopolitical concerns also sent the Euro lower against the safe haven US Dollar. A massing of 20,000 combat ready Russian troops on Ukraine’s eastern border raised fears that Moscow could launch an invasion under the guise of a humanitarian aid mission.
In retaliation to the sanctions imposed upon it by the EU, USA and other allied powers, Russia hit back with sanctions of its own by banning food imports from those nations. Against the USA, it banned all US produced goods.

In the afternoon, the European Central Bank announced its latest policy meeting decision. The Central Bank chose to maintain its monetary policy and kept interest rates at the record low level of 0.15%. ECB President Mario Draghi said that the regions interest rates would remain low for an extended period time as the region’s economic recovery continues to fester.

“The key ECB interest rate will remain at the present level for an extended period of time in view of the current outlook for inflation. Moreover the (ECB) governing council is unanimous in its commitment to also using unconventional instruments within its mandate should it become necessary to further address risks of too prolonged a period of low inflation," said Mr Draghi.


The Eurozone’s rate of inflation is expected to remain low for an extended period, but is forecast to begin to rise in 2015, 2016 that is if the Eurozone avoids sliding back into recession.

The US Dollar made further gains to rise to a nine and a half month low against the Euro as data released in the afternoon showed that the number of US citizens filing and claiming unemployment benefits dropped to the lowest level in eight years.

According to the report published by the Washington, based Labour Department the number of claimants fell by 14,000 to 289,000 last week. Economists had been forecasting for a slight increase.

The data added to signs that the world’s largest economy is recovering strongly and put more pressure on the Federal Reserve to raise interest rates next year.

EUR/USD Exchange Rate Outlook on Friday:

EUR/USD – The Euro slid to a nine-month low against the US Dollar after European Central Bank President Mario Draghi signalled that the Eurozone monetary policy will remain on a divergent tract from that of the USA’s for an extended period as weak inflation and a faltering economic recovery threatens the region.

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