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EUR/USD Exchange Rate Forecast: Will ZEW Confidence Scores Cause Euro Losses?

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Risk of Euro to US Dollar (EUR/USD) Exchange Rate Losses on ZEW Confidence Data

The Euro (EUR) has traded higher against the US Dollar (USD) today, up to an interbank exchange rate of $1.1586.

This appreciation comes despite the negative influence of Italy’s budgetary issues, which have yet to be resolved.

The Italian government has proposed a budget which will grow the budget deficit instead of shrinking it; this goes against the principles of the European Commission.

Today’s Euro appreciation comes ahead of a potential drop in EUR/USD demand on Tuesday, when ZEW economic confidence data is due out.

Covering changes to reported confidence levels during October, these readings are tipped to show lower optimism in the Eurozone and Germany.

Both economic sentiment indexes are expected to show a slowdown during the month, alongside a dip in perceptions of current German economic conditions.

The ZEW data is only one measurement of economic conditions in the Eurozone, but might still be disappointing enough to trigger EUR/USD exchange rate losses.

Chance for US Dollar to Euro (USD/EUR) Exchange Rate Gains on Retail Sales Stats

The US Dollar (USD) might recover and rise against the Euro (EUR) later today, when high-impact US retail sales data is due out.

Covering changes to levels of retail sales in September, the month-on-month reading is tipped to rise from 0.1% to 0.6%.

On a basic level, an increase in sales activity shows economic strength and might raise US Dollar trader confidence, causing USD/EUR exchange rate gains.

An annual slowdown from 6.6% to 5.2% is also forecast, although this might not cause a drop in USD demand.

While annual data is typically considered more important than monthly figures, such a decline would still leave the US with a healthy level of retail sales activity.

USD/EUR Exchange Rate Forecast: Will Fed Minutes Boost US Dollar with Higher Interest Rate Hints?

Beyond today’s US sales stats, the US Dollar to Euro (USD/EUR) exchange rate could also be affected by Wednesday’s Federal Open Market Committee (FOMC) minutes.

Covering policymaker attitudes at the latest Fed monetary policy meeting, the minutes could trigger a sharp rise in US Dollar demand.

This is largely dependent on whether the minutes point towards a path of continued interest rate hikes in 2018 and 2019.

There have been three Fed interest rates so far this year, ahead of a predicted fourth in November or December.

The less certain point is how many interest rate hikes there could be in 2019.

If this week’s Fed minutes point to multiple rate hikes next year then the US Dollar could see a midweek rise against the Euro.

US President Donald Trump has spoken against continued Fed interest rate hikes, but the central bank’s independence should ensure that this doesn’t cause disruption.