The Euro was strong on Wednesday, and trading right around 1.1720 against the US Dollar at the time of the American session. This jump represents an increase of approximately 0.30% for the day. It extends Euro’s advance for the second straight session. As a result, the currency soared to its highest level in nearly three weeks, above $1.1700. This surge all occurred as market sentiments turned, fueled by a series of economic reports and political events in the U.S.
The US Dollar Index (DXY) lost ground, retreating to levels not seen in more than two weeks, approaching 97.70. The Redback was buoyed by growing inflation worries and concerns regarding Federal Reserve policies. The new United States Consumer Price Index (CPI) report has begun to cause a rethinking of the Fed’s path forward on interest rates. Traders are already eyeing the situation with a potential September rate cut. This change has put the Dollar on the back foot which has only helped to advance the Euro’s rise.
Perhaps even more than usual, political developments have helped guide market forces and caused those market forces to reshape the political landscape. In particular, President Donald Trump has increased attacks on Federal Reserve Chair Jerome Powell. This rate of criticism has stoked prospects of confusion regarding US monetary policy. In a recent statement, Trump indicated that he is “considering allowing a major lawsuit against Powell to proceed,” signaling potential volatility in how monetary policy will be approached in the coming months.
The developing US-Russia peace negotiations are likely to continue to play a significant role in shaping risk sentiment, and as such, the overall direction of EUR/USD going forward. Whether positive or negative developments come out of these talks, they will affect confidence in the markets and lead to revaluations of currencies. Euro/Dollar exchange rate analysts are continuing to monitor these developments, aware of their capacity to significantly impact the value of both the Euro and the Dollar.
Moreover, a range of scheduled economic data releases are expected to drive trading activity in EUR/USD as well. Secondly, on Thursday, analysts will be watching the preliminary Eurozone GDP data. All eyes will turn, of course, to the at least one expected preliminary Employment Change reading for Q2. All eyes are bound to focus on these figures as an indicator of the Eurozone’s overall economic health. This without doubt can have a critical impact on investor sentiment toward the Euro.
US weekly jobless claims and PPI figures out at 8:30 and 10am est. Together, these data points are likely to heavily impact which way the Dollar heads. Should these numbers confirm already high worries about vying US economic recovery, they may be inclined to additional weaken the Greenback and strengthen the Euro’s footing.