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The USD/EUR Exchange Rate Holds Close to Two Week High On Market Caution

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Stock Market Concerns Prompt USD/EUR to Hold Steady

The US Dollar Euro (USD/EUR) exchange rate is seeing limited movement this morning as investors play it safe amid the continued stock sell-off.

At the time of writing USD/EUR is holding close to its opening levels, with the pairing look set for its best week since October.

US Dollar (USD) Resilient as Plunge in Stocks Prompt Caution

The US Dollar is finding support in currency markets this morning as investors look to hold their positions amid concerns over the global stock market.

Stocks markets have fallen sharply this week on speculation that central banks and particularly the Federal Reserve are likely to speed up their efforts to tighten monetary policy this year.

While the sell-off of stocks has had a fairly limited impact on currency markets this week, it is still driving some of the more skittish investors towards safe haven assets such as the US Dollar.

However at the same time the ‘Greenback’s appeal have been dented somewhat this morning by the US government’s failure to prevent another shutdown.

While a bill is now making its way through the US House of Representatives, it is unclear whether it will pass before the start of the working day on Friday.

Euro (EUR) Losses Trimmed by Impressive Industrial Production Figures

At the same time the Euro was prevented from falling against the US Dollar this morning as French and Italian Industrial Production figures came in higher than expected in December.

Data showed that the factory output rose from -0.3% to 0.5% and 0.2% to 1.6% in France and Italy respectively.

This was a solid end to the year for the second and third largest economies in the Eurozone and markets hopeful that this uptrend may continue into 2018.

USD/EUR Forecast: US Inflation to Remain Unchanged?

Looking ahead to next week’s session the USD/EUR exchange rate may face some setback as the US publishes its latest CPI figures.

Economists forecast that US inflation will have held at 2.1% in January, possibly complicating the Fed’s hope to deliver more rate hikes in 2018.

On top of this Wednesday will also see the release of the latest US retail sales figures, with an expected slowing of sales growth at the start of the year likely to weigh on the US Dollar.

Meanwhile the focus for Euro investors its likely to be on the Eurozone latest estimate for fourth quarter GDP, with the reading expected to confirm the bloc’s solid growth at the end of last year.