Euro Dollar Rate Forecast: Exchange Rate Nearing the Key 1.3503/1.3477 Support Area

However, against the US dollar we note a vacuum of compelling data to push the euro dollar rate in either direction. Despite it's headline-grabbing qualities the Malaysian airline tragedy has had little sway on the majors.

This data and the possibility of a relief rally have aided some modest euro gains. The latest rates at the time of writing are:

• The euro to pound exchange rate is 0.02 pct higher at 0.7912, this adding to Thursday's gains which have taken euro buyers from their best levels of 2014.
• The euro to dollar exchange rate is 0.04 pct higher at 1.3532.

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Euro forecast: Support against further USD advances seen in the near-term

The euro still remains exposed to further USD strength at present, however support levels at 1.35 are being touted as significant to halting any major declines.

Commenting on the euro dollar rate's outlook is Piet Lammens at KBC Markets who says:

"EUR/USD is gradually nearing the 1.3503/1.3477 support area. For now, we don’t see a clear trigger for EUR/USD to break this important support.

"Even so, the downside momentum of EUR/USD and EUR/JPY clearly strengthened of late. So there is no reason to row against the tide."

Longer-term though KBC Markets are warning that a broader USD uptrend will likely persist.

A longer-term point to ponder: A gradual decline in the euro?

The forecast for the euro dollar rate remains difficult to call owing to the often unexpected stubbornness of the euro in the face of poor economic data.

Analysts at Barclays have reflected on this saying that despite near-term strength the longer-term bias should be lower for the euro dollar.

Jose Wynne at Barclays tells us:

"EURUSD looks low relative to real interest rate differentials, stopping some from adding to shorts or causing them to fade the move.

"We think that even if the ECB disappoints, the EUR should move lower as the Fed drops the easing bias.

"More importantly, we believe circumstances are fast increasing the risks that the ECB will be forced to launch further unconventional measures.

"What, when and how are less certain, but there are strong hints that a weaker EUR may be the only channel to reflate the economy."