Euro Exchange Rate Today: EUR Enters Stalemate vs US Dollar as 1.35 Floor Remains Intact

The euro pound exchange rate (EUR/GBP) has meanwhile enjoyed a relief rally in the final half of the week that initially saw the GBP advance on the back of the UK's economic outperformance over the Eurozone.

A look at the key EUR rates at the time of writing shows:

• The euro dollar exchange rate is unchanged at 1.3531.
• The euro to pound exchange rate is unchanged at 0.7911.
• The euro to Aus dollar is 0.34 pct lower at 1.4419.
• The euro to NZ dollar is 0.16 pct lower at 1.5587.

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Outlook for the euro: A backseat passenger to the dollar?

After all of the fanfare around Janet Yellen's semi-annual testimony on the economy and monetary policy, she ended up causing very little action in the euro dollar exchange rate.

It seems for now the euro is dependent on events in the US, rather than in the Eurozone.

"The path of the currency will be dependent on the market's appetite for U.S. dollars and the divergence in the performance between Eurozone and U.S. yields," says Kathy Lien at BK Asset Management.

According to Lloyds Research, "EUR, CHF, JPY The EUR and CHF both weakened against the JPY as well as the USD yesterday, supporting our view that the EUR and CHF are now more vulnerable to USD strength."

The USD has been firm since the initial Yellen testimony on Tuesday, and has threatened the highs of its recent ranges against most of the G10 currencies, "but we doubt that there is yet enough substantive news for these ranges to break in the short term," caution Lloyds.

"We therefore think EUR/USD looks unlikely to break out of the recent 1.35-1.37 range," says a morning currency briefing from Lloyds Bank Reseach.

Emmanuel Ng at OCBC Bank tells us:

"Amid the summer doldrums, EUR-USD may be tempted lower in the near term given the current dollar backdrop with the 55-day MA (1.3656) expected to cap while interim support is also expected into 1.3530/50.

"In the interim, we remain directionally uncommitted."

Also suggesting we are unlikely to see little major movement in the EUR/USD is Piet Lammens at KBC Markets:

"Recently, we changed our short‐term bias on EUR/USD to neutral. In a longer term perspective, the gradual rise of the dollar against the euro will probably stay intact. However, short‐term we see no trigger for EUR/USD to break below the 1.3503/1.3477 support."

Euro to pound sterling (EUR/GBP): More losses ahead?

Meanwhile, the GBP continues its ascendency on global currency markets with gains coming against the euro in particular.

Lammens tells us KBC are maintaining their bearish stance on the euro pound at present:

"Recently, EUR/GBP stayed within reach of the cycle lows, but the decline slowed. The UK news was a bit more mixed and the negative headlines from Europe had no big negative impact on the single currency.

"However, yesterday’s jump in UK inflation brought sterling back to the recent highs against the euro and the dollar. The standing EUR/GBP downtrend remains intact and the day-to‐day momentum turned again sterling positive after yesterday’s UK inflation report.

"Even so, the UK data will have to be strong to inspire a new sterling upleg. We maintain a sell‐on‐upticks bias."

Euro higher against the NZ dollar

Regarding the EUR/NZD exchange rate, it is worth noting some solid gains made on the back of the collapse in the NZD overnight.

New Zealand Q2 CPI came in at +1.6% YoY, which is lower than market expectations at +1.8%.

"This may influence the interest rate debate over coming months but I’m sure the RBNZ will need to see a lot more data before changing tack," says Sean Lee at ForexTell.

It's not only inflation that is bothering the New Zealand unit. According to Lucy Cramer at the Wall Street Journal:

"New Zealand has emerged as a standout mainly because of surging Asian demand for its dairy exports such as milk and butter. But another sharp fall in the price of dairy products offered at auction suggested the outlook may be turning sour."

ANZ Research have confirmed to clients that the prospects for the NZD have turned somewhat noting that dairy price falls on the scale being seen now represented a material change to New Zealand's risk profile.