Euro to US Dollar Exchange Rate Struggles to Hold Weekly Highs
Investors bought the Euro over the US Dollar (EUR/USD) at the beginning of the week as USD experienced a general selloff amid risk-on movement. However, a dent in the risk rally this morning prevented EUR/USD from climbing much higher.
After opening this week at the interbank level of $1.13, EUR/USD saw gains of around a third of a cent yesterday. The pairing was unable to hold onto its weekly highs and saw modest losses today, as the US Dollar steadied.
Due to weak Eurozone data and market concern about the Eurozone’s economic outlook, the Euro may lack the drive to recover from February’s losses.
Most of this week’s EUR/USD gains have been due more to US Dollar weakness than Euro strength, as traders look for riskier investments over safe havens.
Euro (EUR) Exchange Rates Fail to Hold amid Lack of Fresh Support
The Euro (EUR) is the US Dollar’s (USD) biggest currency rival, and as a result the two currencies have something of a negative correlation.
When the US Dollar weakens, the Euro often strengthens.
This has been the primary cause of Euro strength this week, as the latest Eurozone data has continued to paint a murky picture for the Eurozone economic outlook.
Markets are becoming increasingly concerned that the Eurozone’s economic slowdown will last longer than expected, although a recession is still seen as unlikely.
Recent Eurozone data has further worsened Eurozone economic jitters, though today’s stats had little impact.
Germany’s March consumer confidence figure from GfK remained at 10.8 as expected, while French consumer confidence unexpectedly improved to 95 in February.
US Dollar (USD) Exchange Rates Firm Ahead of Fed Chairman Testimony
Investors have had little reason to buy the US Dollar (USD) this week, but the sturdy safe haven currency’s losses versus a generally unappealing Euro (EUR) have been limited.
Demand for the US Dollar improved a little overnight as well, as US S&P 500 equity futures slipped. This made investors a little keener to hold onto safe haven assets like the US Dollar.
On top of the small rise in safe haven demand, the US Dollar is being supported by investors anticipating upcoming testimonies from Federal Reserve Chairman Jerome Powell.
Powell will testify about the US monetary policy outlook and the Federal Reserve to the US Congress over the next two days.
While investors expect Powell’s comments will do more to make investors hungry for risks than bolster the US Dollar, investors were hesitant to move too much on the US currency ahead of his comments.
Euro to US Dollar (EUR/USD) Exchange Rate Investors Anticipate Fed News and Eurozone Data
Federal Reserve Chair Jerome Powell will testify to Congress this afternoon and tomorrow afternoon, and these are the events over the coming days most likely to influence the US Dollar (USD).
Tomorrow’s US factory orders results from December are likely to be influential too. If factory orders are worse than expected, US industry jitters could become more pronounced and the US Dollar may weaken.
As for the Euro, notable Eurozone stats due in the coming days will be the focus.
Wednesday will see the publication of the Eurozone’s February confidence figures, including business confidence, consumer confidence and other sentiment stats.
Even more influential data will come in towards the end of the week, including February inflation projections for Germany and the Eurozone, as well as Markit’s manufacturing PMI projections for the bloc.
If Eurozone data comes in better than markets expect, the Euro to US Dollar (EUR/USD) has a better chance of climbing further for the rest of the week.