Euro to Dollar forecast for the week 

Euro Rally on Cards if ECB Officials Forecast Eurozone Growth Pickup This Week

The new week finds the EUR USD exchange rate above the 1.06 level, quoted at 1.06026 at 07:30 on Monday 6th March.

Last week saw the euro dollar pairing start trading at 1.05 and end at around the same rate, owing to rising confidence giving way to concerns about the impending Dutch election.

The biggest news saw a range of confidence measures rise in February, along with rising German and Eurozone inflation.

In the latter case, overall inflation hit 2% on the year in February, which put it above the European Central Bank (ECB) target.

This raised a few hopes that the ECB might start back on the path towards monetary policy tightening, although seasoned economists predicted a more sedate response from the ECB. This latter forecast was based on the previous furore triggered by the 2011 rate hikes that worsened the Euro debt crisis.

Key Eurozone News This Week – ECB Interest Rate Decision and Eurozone GDP Stats in Focus

The first major Eurozone data this week will be Tuesday’s GDP growth rate results, which are set to show a quarterly rise and annual reprint at 1.7%.

The main event, however, will be Thursday’s European Central Bank (ECB) interest rate decision and press conference.

While inflation has been noteworthy of late, Erste Bank economists still predict a negligible ECB response;

‘The [recent] good economic data is likely to be mentioned, but this will not put pressure on the ECB to take immediate action. [Especially because] economic recovery is, from the Council’s point of view, based on the ECB’s extremely loose monetary policy…we expect no further change in monetary policy until year-end’.

Even if the ECB simply acknowledges that inflation is rising, the Euro could still appreciate due to the positive implications of such a development.

US Dollar Bolstered by Fed Rate Hike Bets Last Week

The prior strengthening of the US Dollar was largely caused by speeches from Federal Reserve officials, who were generally hawkish about the next US interest rate decision.

Emphasising this surging optimism among investors was the CME Group Fedwatch chart, which saw the odds of a rate hike in March rise from around a third on Monday to over 77% on Friday.

US data was not so supportive, with GDP growth sliding from 3.5% to 1.9% and a congressional address from Donald Trump raising more questions than answers.

US Trade Balance and Jobs Stats could Trigger USD EUR Rally This Week

Asides from any further building sentiment over the Fed rate decision, the US Dollar is set to be moved by trade and jobs-related data this week.

Tuesday’s trade deficit figure is forecast to expand, which could damage the US Dollar, while the Adp employment change on Wednesday is predicted to shift down from 246k to 190k.

Greater US Dollar support could come on Friday, when the US unemployment rate is expected to fall from 4.8% to 4.7%.

The non-farm payrolls figure, also measuring job growth, is expected to post 186k and could boost US Dollar demand if it exceeds this figure.

EUR USD Data Releases

10:00 EUR GDP Growth Rate (QoQ) 3rd Estimate Q4

10:00 EUR GDP Growth Rate (YoY) 3rd Estimate Q4

13:30 USD Balance of Trade JAN

Source: ExchangeRates

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