Due to a lack of support from either domestic or global developments, the Euro remains unappealing and last week was yet another week of losses for the Euro to US Dollar (EUR/USD) exchange rate. Investors find the Euro unappealing due to lingering fears of a lasting slowdown in Eurozone economy, as well as the possibility that further slowdown is ahead due to the coronavirus outbreak. Meanwhile, the US Dollar is resilient on US economic hopes.
Last week saw the Euro continue on its bearish selloff, and EUR/USD tumbled from 1.0945 to 1.0831 throughout the week. This week so far, EUR/USD has only edged slightly higher and remains close to its worst levels.
This morning, EUR/USD touched on a low of 1.0821 – the pair’s worst level in over two years, since April 2017. A lack of support in the Euro is making it difficult for the shared currency to sustain any notable recovery against its rival the US Dollar.
EUR Exchange Rates Flounder near Multi-Year-Worst as Eurozone Growth Concerns Worsen
Last week was yet another bearish one for the Euro, as a lack of fresh support as well as disappointing Eurozone data left investors even more anxious about the Eurozone’s economic outlook.
Most of the week’s Eurozone data was fairly mixed, but Friday’s Gross Domestic Product (GDP) growth rate projections fell short of forecasts in some key prints.
Germany’s Q4 growth projections printed a stagnant 0.0% quarter-on-quarter and overall Eurozone growth unexpectedly slowed to just 0.9% year-on-year.
As a result of these poor growth stats, even the Eurozone’s stronger than expected employment change results were unable to give the Euro much notable support.
As coronavirus concerns are taking more of a backseat long-term impact on markets, the Euro has been unable to benefit from this or US Dollar weakness as much either.
According to analysts from ING:
‘EUR/USD seems to be comfortably trading around its new lows and in the next few days we expect to see a continuation in the recent downtrend rather than any clear rebound,
The fears around the coronavirus impact on the Eurozone economy remain well in place while data this week should be in line with latest releases in providing a non-encouraging picture.’
USD Exchange Rates Resilient amid Coronavirus Uncertainty and US Ecostats
Since late-January, the US Dollar has been appealing again as the intensity of safe haven demand softens slightly and US data shows more signs of strength.
The coronavirus caused a strong surge in safe haven demand in January. The US Dollar is a safe haven currency, but in times of particularly strong safe haven demand it typically is less appealing than safe haven rivals like the Japanese Yen (JPY) and Swiss Franc (CHF).
As the coronavirus spread has calmed slightly and markets are less panicked, the US Dollar is benefitting from the slightly weaker safe haven demand.
US data has also been decent as US inflation was stronger than expected last week. US retail sales met expectations on Friday and while production fell short, it was not significant enough to impact Federal Reserve interest rate cut speculation.
As the Euro is the US Dollar’s biggest rival, weakness in Eurozone data and the Euro has also made it easier for the US Dollar to see strong performance lately.
EUR/USD Exchange Rate Forecast: Could Upcoming Eurozone Data Boost Recovery Hopes?
With coronavirus jitters likely taking more of a backseat for forex markets, the Euro to US Dollar exchange rate may be influenced more by data in the coming sessions.
Eurozone economic sentiment data from ZEW, due tomorrow, could boost Euro support if it beats expectations as this would boost Eurozone recovery hopes.
Eurozone construction data and US housing stats will follow on Wednesday, but the Federal Reserve meeting minutes report will be the day’s most influential news.
As for the week’s most influential news overall, Friday’s Eurozone PMI projections could give investors a better idea of how the Eurozone economy is performing this month.
If the PMIs fall short, then the Euro to US Dollar exchange rate could be in for even deeper losses.
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