February 25, 2019 - Written by John Cameron
STORY LINK US Dollar Euro (USD/EUR) Exchange Rate Falls as Trump Delays Tariffs on Chinese Imports
USD/EUR Exchange Rate Drops on Diminishing US Dollar Safe-Haven Demand
The US Dollar Euro (USD/EUR) exchange rate is down today and is currently trading at €0.8809 on the inter-bank market.
USD fell against the Euro (EUR) today following US President Donald Trump agreeing to delay tariffs on Chinese imports – diminishing the US Dollar’s safe haven demand.
This has enabled the US to extend trade negotiations, which are reportedly making ‘substantial progress’ ahead of Trump’s meeting with Chinese President XI Jinping, which, he says, will ‘conclude an agreement’.
The US Dollar was further hit by the publication of the US Chicago National Activity Index figures for January today, which fell to -0.43 and left some ‘Greenback’ traders jittery over signs of a struggling US economy.
The Euro, meanwhile, edged higher against the ‘Greenback’ today despite last week’s disappointing German GDP figures for the fourth-quarter, which narrowly skimmed a recession at 0% – confirming the consensus.
EUR further benefited today following bullish comments from Olaf Scholz, the German Finance Minister, who showed optimism in the face of last week’s poor figures.
‘We continue to have a proper economic development… we can expect very subdued growth, but an upward trend.’
Euro US Dollar (EUR/USD) Exchange Rate Rises on Franco-German Eurozone Budget Proposal
Today also saw France and Germany agree on a proposal for a Eurozone budget which would effectively encourage growth and stability.
The joint Franco-German proposal read:
‘The purpose of the Eurozone budgetary instrument would be to foster competitiveness and convergence in the Eurozone.’
This has buoyed market confidence in the Euro today with signs of cohesion between the two largest economies in the Eurozone relieving some pressure on the single currency.
Due to the lack of Eurozone economic data today, many single currency traders have likely been focusing on political developments surrounding Brexit.
Optimism has increased over the possibility of the UK and EU securing a deal, with the President of the European Council Donald Tusk deeming the most rational option being to push for an extension of Article 50.
‘I believe in the situation we are in an extension would be a rational solution, but Prime Minister May believes she is still able to avoid this scenario.’
‘I can assure you, and I did it also yesterday in my meeting with Prime Minister May, that no matter which scenario will be, the EU27 will show maximum understanding and goodwill.’
USD/EUR Forecast: Euro Could Rise Further on Positive German Consumer Confidence
USD investors will be looking ahead to the Chair of the Federal Reserve, Jerome Powell, who is due to testify before Congress tomorrow.
He will provide an overview of the US economy and monetary policy; any bullish remarks could prove USD-positive.
Tomorrow will also see the publication of the US housing starts figures for December, which are expected to decrease.
Euro traders, meanwhile, will be awaiting the release of the German Gfk consumer confidence survey figures for March, and with any signs of an increase this could provide some further uplift for the EUR/USD exchange rate.
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TAGS: American Dollar Forecasts Daily Currency Updates Euro Forecasts