EUR/USD Exchange Rate Declines as German Confidence Scores Fall below Forecasts

April 25, 2018 - Written by Tim Boyer

STORY LINK EUR/USD Exchange Rate Declines as German Confidence Scores Fall below Forecasts

On Tuesday’s trading session (24th April), the Euro to US Dollar exchange rate opened in the region of 1.2206 in the morning and later closed higher around 1.2237 during the evening.

This advance came despite the odds, when highly pessimistic German economic confidence stats for April were released over Tuesday morning.

EUR/USD Exchange Rate Drops after Gloomy German Confidence Surveys

The Euro (EUR) to US Dollar (USD) exchange rate has fallen by -0.5% today, following the release of highly disappointing German economic confidence readings.

The Ifo surveys, released on 24th April, showed a marked deterioration in confidence levels over April but March’s stats also caused concern as they showed a significant downgrade during the month.

For context, March’s business climate reading fell from 114.7 points to 103.3 and the current conditions figure was downgraded from 125.9 points to 106.6.

The March-to-April declines weren’t so large, but overall Euro trader sentiment from the data was overwhelmingly negative.

Even a caveat mentioned by Ifo analyst Klaus Wohlrabe was not enough to boost the Euro to US Dollar exchange rate;

‘German business sentiment for a long time had been extremely elevated. What we are observing right now is a normalization, not a downturn’.

Today’s Eurozone economic data has also failed to inspire a EUR/USD exchange rate rally; French consumer confidence has risen in April, but Belgium’s industrial production levels have slowed during February.

USD/EUR Exchange Rate Rises 0.3% on Hopes of ‘Imminent’ US-China Trade Deal

As the week’s data draught continues, the US Dollar (USD) has still been able to rise moderately against the Euro (EUR) today; other US Dollar exchange rates have also improved.

This positive trading follows a statement from President Donald Trump that suggests an imminent resolution to the US-China trade conflict.

The two nations have been in the headlines over the past fortnight, with both threatening sizable tariffs against one another in the opening stages of a trade war.

Indicating that an economic conflict could be avoided, Mr Trump has said;

‘China’s very serious, and we’re very serious. We’ve got a very good chance at making a deal’.

Backing up these words with action, Mr Trump also mentioned that US Treasury Secretary Steven Mnuchin is due to travel to China as part of the talks.

It is widely reasoned that a US-China trade war would not only harm those two nations, but also catch countries like Australia and New Zealand in the crossfire.

There was additional supportive US economic news on the afternoon of 24th April, when a 4% rise in new home sales was reported in March; a 1.9% figure had been forecast.

EUR/USD Forecast: Can Euro to US Dollar Exchange Rate Rise on ECB Interest Rate Decision?

The Euro to US Dollar (USD/EUR) exchange rate may be able to rise on 26th April, when a high-impact European Central Bank (ECB) monetary policy meeting will take place.

ECB officials are predicted to leave interest rates untouched at 0%, but ECB President Mario Draghi could still trigger a Euro rally in his highly-influential press conference.

Mr Draghi may touch on the future direction of ECB monetary policy; for the Euro to rally he will need to suggest a possible tightening of policy in the coming months.

That isn’t the most likely outcome, given the ECB and Mr Draghi’s historical focus on caution over rash action, so the Euro may remain static if the press conference produces the usual statements.

A EUR/USD exchange rate rise could still take place on the day, however, as US economic data could match with pessimistic forecasts and weaken the US Dollar.

The US’s durable goods orders reading for March is tipped to show a month-on-month decline from 3.1% to 1.6%, which would indicate an almost 50% reduction in monthly orders.

Further USD/EUR exchange rate losses could be caused by any growth in the initial and continuing jobless claims counts for April, which would indicate economic instability.

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TAGS: Euro Forecasts