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EUR/USD Forecast: Euro to US Dollar Exchange Rate Softens as US Initial Jobless Claims Better Forecast

May 13, 2021 - Written by John Cameron

Euro (EUR) Exchange Rates Under Pressure Ahead of ECB Meeting Minutes

The Euro to US Dollar (EUR/USD) exchange rate found itself on a narrow trend in the absence of any fresh Eurozone economic data releases.

Anticipation ahead of the release of the European Central Bank’s (ECB) most recent set of meeting minutes also put pressure on the Euro at this stage.

With markets expecting to see another dovish message from the central bank there appeared little room for the Euro to push higher against its rivals at this stage.

While the ECB is not expected to show any signs of altering monetary policy in the months ahead, though, any fresh signs of dovishness may still have a limited impact on EUR exchange rates.

As markets have already priced the odds of a neutral ECB stance into the single currency the potential for additional movement looks muted in the near term.

US Dollar (USD) Exchange Rates Rally on Lower Initial Jobless Claims Figure

On the other hand, the US Dollar found fresh support on Thursday on the back of the latest initial jobless claims figure.

While forecasts had pointed towards an increase of 490,000 on the week claims instead saw an uptick of 473,000.

This suggests that the labour market started to recover from its April faltering, diminishing the impact of the recent disappointing non-farm payrolls report.

With a lower number of Americans signing on for jobless claims hopes of a greater economic recovery to come naturally picked up.

However, the potential for stronger USD exchange rate gains proved somewhat limited in the wake of Wednesday’s sharp uptrend.

The fading impact of the stronger inflation data and the still-low odds of any future Federal Reserve policy action put a bit of a dampener on the US Dollar.

EUR/USD Exchange Rate Forecast: Weaker US Retail Sales and Manufacturing Production to Weigh on US Dollar

Support for the US Dollar could weaken further on Friday if April’s retail sales data fails to impress.

In the wake of March’s sharp 9.8% increase sales are expected to show a much lower level of monthly growth, with the figure set to clock in at 1%.

This lower reading could put some pressure on the US Dollar, suggesting that the second quarter got off to a weaker start than investors might have liked.

A slowdown in April’s industrial and manufacturing production figures could also help to shore up the EUR/USD exchange rate ahead of the weekend.

Evidence that the manufacturing sector lost some of its momentum at the start of the second quarter may leave the US Dollar biased to the downside on Friday.
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