Euro to US Dollar Exchange Rate Looks to End Week Lower Despite USD Weakness
Despite lingering hope for Eurozone economic resilience and some weak US data, the Euro to US Dollar (EUR/USD) exchange rate may be on track to end this week lower after all as the latest Eurozone data showed some concerning signs.
Following last week’s impressive EUR/USD gains from of $1.12 to $1.13, this week’s movement has been relatively subdued in comparison.
EUR/USD was trending around a third of a cent lower today, but still remained well above last week’s lows.
The Euro to US Dollar exchange rate has been driven largely by economic data this week. Both Eurozone and US data has had fairly disappointing signs on factory data, but the Euro (EUR) was ultimately the less appealing of the two.
Euro (EUR) Exchange Rates Tumble on Concerning Eurozone Manufacturing Data
Earlier in the week, investors bought the Euro (EUR) on hopes that the Eurozone economy was seeing a rebound from the poor performance it had experienced since late last year.
Signs of strength in Eurozone economic activity included a stronger-than-expected economic sentiment report from ZEW on Tuesday, but demand for the Euro took a hit this morning as Markit’s latest Eurozone PMI projections were mixed.
Markit’s April PMI projections for France and Germany continued last month’s trend. While the bloc’s services sector was rebounding from a slowdown, the manufacturing sector continued to perform short of expectations.
French manufacturing actually slowed further, to 49.6, rather than recovering to the expected 50.0, while Germany’s figure showed a slight recovery, but was still very low at 44.5.
The overall Eurozone PMI projections reflected this. In fact, the services sector performed short of expectations as well, leading to a disappointing month for Eurozone economic activity.
US Dollar (USD) Exchange Rates Benefit from Rivals’ Weakness
Despite a lack of fresh supportive factors for US Dollar (USD) trade, and yesterday’s US wholesale inventories printing below expectations, the US currency saw stronger demand today.
Investors have been buying the currency back in profit-taking, inspired partially by weakness in its rivals.
As the Euro (EUR) is the US Dollar’s biggest currency rival, the currencies often see a negative correlation. The Euro’s losses today led to US Dollar gains.
On top of this though, higher demand for safe haven currencies supported the US Dollar today. After being impressed by Chinese growth data yesterday, investors sold riskier currencies from their best levels and the US Dollar benefitted.
Euro to US Dollar (EUR/USD) Exchange Rate Traders Await Further Data
Today’s disappointing Eurozone data is likely to weigh on hopes for a Eurozone economic rebound.
Euro (EUR) investors will still be looking ahead for further signs of resilience in the Eurozone economy in upcoming data, but for now the outlook is cloudy and markets are expecting further cautiousness from the European Central Bank (ECB).
This week’s US data has been relatively low-influence so far though, so the Euro to US Dollar (EUR/USD) exchange rate’s movement could shift if upcoming US data is highly surprising.
This afternoon’s US retail sales and PMI projections could cause a slump in US Dollar (USD) demand if they fall well short of expectations. While many markets will be observing bank holidays tomorrow, US housing data could still prove influential too.
Looking ahead to next week, Euro to US Dollar (EUR/USD) exchange rate investors will be highly anticipating Eurozone confidence data, as well as more US factory data and key US growth data.