The exchange rate of the euro/dollar currency pair is still trading around the level of 1.1800.
The pressure on the single currency remains due to higher real interest rates in the United States compared to Europe due to the divergence in monetary policy and economic growth rates. The dollar index has been hovering between 92.3 and 92.9 over the past week, as several Fed officials suggested that the US Central Bank could reduce its purchases of debt securities by the end of the year, even after the employment report was much weaker than expected. Although increased inflation is putting pressure on policymakers, data released yesterday showed that the US consumer price index, excluding unstable components of food and energy, rose by only 0.1% last month. Next week, the Federal Open Market Committee will hold a meeting on monetary policy. Investors are waiting to see if an announcement will be made about the reduction of the quantitative easing program.
The forecast assumes a decline in the euro/dollar exchange rate to the support levels of 1.1780, 1.1760 and 1.1730.