Euro to US Dollar Exchange Rate Hits Multi-Month Highs Amid Trump Disappointment

The Euro to US Dollar exchange rate outlook has improved notably in the last few weeks, as Eurozone political concerns abate slightly while the US outlook under the President Trump administration becomes increasingly uncertain.

EUR/USD put in a solid gain of around half a cent last week, rising from 1.0745 to 1.0805. Monday morning saw the pair jump by over 0.5% again, hitting a new 2017 high of 1.0871.

Euro (EUR) Benefits from French Election Polling and Eurozone Ecostats

Demand for the Euro remains solid this week, as Eurozone political jitters continue to fall back and the latest Eurozone ecostats come in persistently strongly.

Earlier in 2017, the Euro saw significant weakness amid increasing concerns that a populist leader could withdraw a key nation from the Eurozone and undermine the shared currency.

Of particular focus has been the 2017 French election, which has seen anti-EU Presidential candidate Marine Le Pen rising in popularity. Le Pen has stated she would remove France from the Eurozone if she became President.

However, in recent weeks, pro-EU candidate Emmanuel Macron has become increasingly popular in opinion polls for the first round, increasing bets that he could also win the second round of the election which takes place in May.

Last week also saw the publication of the Eurozone’s preliminary March PMIs from Markit. They beat expectation in all major prints, which bolstered Euro support.

US Dollar (USD) Sold Off as ‘Trump Rally’ Unravels
The last week has seen uncertainty over the future of the US economy soar.

Investors had previously bought into the US Dollar and US stocks after hearing Trump planned to introduce new US fiscal policies that would stimulate the economy. This was called the ‘Trump rally’ by analysts.

As his Republican party controls both the House and Senate, markets hoped he would be able to smoothly pass through fiscal policy overhauls.

However, last Friday saw Trump and House Speaker Paul Ryan withdraw Trump’s ‘American Healthcare Act’ (AHCA) bill due to a lack of perceived support from Republicans.

This has led traders to unwinding the ‘Trump rally’ over the last week amid newfound doubts over the Trump administration’s support in US Congress.

EUR/USD Forecast: Investors Await Fed News

With market confidence in US President Trump slipping, investors will instead be highly anticipating the next moves of the <a title="Federal Reserve" target="_blank" href="http://www.federalreserve.gov/">Federal Reserve</a> before deciding their own next moves on the US Dollar.

Fed officials have previously indicated that it would likely not consider altering US monetary policy in May’s meeting and is more likely to wait until June before acting again.

However, investors hoping for a more hawkish tone from the Fed due to strong US data will be highly focused on a Tuesday speech from Fed Chairwoman Janet Yellen. Traders will hope for Yellen to indicate that the Fed interest rate outlook could increase to four or more rate hikes in 2017.

Tuesday will also see the publication of the US advance goods trade balance from February and March US consumer confidence results, though this is unlikely to have a strong influence on USD.

If Yellen disappoints, the Euro to US Dollar exchange rate could put in some more easy gains this week, especially if Eurozone ecostats continue to impress.

German inflation data from March will be published on Thursday, followed by Germany’s February retail sales and March employment figures on Friday.