Euro to US Dollar Exchange Rate News: EUR/USD Rises as Turkish Economic Crisis Continues

August 13, 2018 - Written by Ben Hughes

STORY LINK Euro to US Dollar Exchange Rate News: EUR/USD Rises as Turkish Economic Crisis Continues

Last week, the Euro to US Dollar (EUR/USD) exchange rate opened in the range of $1.1562 on Monday and closed down lower at $1.1420 on Friday.

This overall deterioration for the single currency was down to growing concerns that a Turkish economic collapse could negatively affect Eurozone banks.

European Central Bank (ECB) officials warned of the possible fallout effects from a Turkish economic meltdown as investors abandoned the Turkish Lira for safer currencies.

There was additional support for the US Dollar in the USD/EUR exchange rate last week when core annual inflation was reported higher in July.

This raised hopes for a Federal Reserve interest rate hike in the coming months, which linked with USD trader speculation for two more rate hikes this year.

Euro to US Dollar (EUR/USD) Exchange Rate Rises on Reduced Fears of Turkish Economic Meltdown

Today has been a relatively quiet start to the week in terms of Eurozone news, but the Euro (EUR) has still managed to advance against the US Dollar (USD).

This appreciation comes after a slight improvement in Turkey’s economic situation, which has lessened concerns that there could be repercussions for Eurozone banks.

Turkey’s central bank is reportedly taking measures to contain the current economic malaise, which include increasing liquidity for Turkish banks and engaging in foreign exchange markets.

The Turkish economy (and Eurozone banks) are by no means out of the woods yet, but there are nonetheless hopes that the situation could continue to improve in the coming days.

US Dollar to Euro (USD/EUR) Exchange Rate Dips on Continued Trade War Concerns

The US Dollar (USD) has given a mixed performance today, falling against the Euro (EUR), rising sharply against the Indian Rupee and trading tightly against other peers.

This mixed performance has been caused by continuing uncertainty about how ongoing trading conflicts will affect the US economy – the US-China spat is currently in focus.

On the optimistic side, some economists believe that the uneven nature of US and Chinese trading could force China to make concessions to the US.

Less positively, however, there are growing concerns that US households and businesses could face pressure from the ongoing side-effects of the international trading conflict.

Euro to US Dollar Exchange Rate Forecast: Will EUR/USD Drop on Eurozone GDP Slowdown?

The Euro’s (EUR) tentative gains against the US Dollar (USD) this week could give way to losses as early as Tuesday morning, when high-impact Eurozone GDP data will come out.

Current expectations are for the pace of economic growth in Germany and the Eurozone to have slowed during Q2 2018; such results could lower Euro trader confidence.

The German data will consist of flash estimates while the Eurozone figures will be second estimates; annual German and both yearly and quarterly Eurozone GDP is tipped to slow.

A slower pace of economic expansion could unsettle Euro traders, although on the other hand unexpected growth could boost demand for the Euro.

Other Eurozone data out on Tuesday could cement EUR/USD exchange rate losses – the morning’s ZEW confidence scores are tipped to show worsening perceptions of current conditions and a still-negative economic sentiment reading.

On the other side of the currency pairing, the US Dollar could be influenced by Wednesday afternoon’s July retail sales stats, along with Friday’s consumer confidence reading.

Taking these in order, the US Dollar could drop on Wednesday if retail sales are reported lower; current estimates are for a slowdown in sales activity on the month and the year.

The situation could improve on Friday if August’s University of Michigan consumer confidence reading rises from 97.9 points to 98 as predicted.

Outside of these scheduled economic events, the EUR/USD exchange rate could also be affected by any fresh developments in Turkey.

The nation’s ongoing economic crisis could weaken the Euro and raise demand for the comparatively safer US Dollar, in the event that international investors lose confidence in future Turkish economic stability.

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TAGS: Euro Forecasts