Euro to US Dollar Exchange Rate Slips as Eurozone Data Fails to Support Pair
Since markets opened this week, the Euro to US Dollar (EUR/USD) exchange rate has been trending with an upside bias. However, overnight the Euro (EUR) became weaker amid a lack of support in Eurozone data, while the US Dollar (USD) gained on fresh trade jitters.
Following last week’s gain from the interbank level of 1.10 to 1.11 on the back of a US-China trade deal, EUR/USD has continued to edge higher this week so far.
However, EUR/USD has been unable to reach the highs seen last Thursday night, and much of this week’s modest advances faded last night. At the time of writing, EUR/USD only trends slightly above the week’s opening levels.
Investors are hesitant to buy the Euro too much as this week’s Eurozone data has been generally unimpressive so far. The safe haven US Dollar is gaining as fresh trade uncertainties keep it appealing.
For now, investors, await key data and central bank news expected in the coming days.
Euro (EUR) Exchange Rates Struggle amid Lagarde Speech and Mixed Eurozone Data
For much of the past few sessions, the Euro (EUR) has been attempting to climb back to its best levels following a few weeks of stronger performance.
However, while last week’s Eurozone data was fairly solid, this week’s data has been unable to keep up the trend.
Monday saw the publication of the Eurozone’s December PMI projections, which showed manufacturing contracting more deeply than expected in Germany and the Eurozone overall.
Instead of Eurozone data, the Euro’s strength in recent sessions had been due to broad weakness in rivals like the Pound (GBP) and US Dollar (USD). As the US Dollar has been seeing stronger demand since last night, the Euro has been unable to keep climbing.
Even today’s stronger than expected German business confidence stats from Ifo were not enough to keep the Euro higher.
US Dollar (USD) Exchange Rate Appeal Boosted as US-China Trade Uncertainty Lingers
The safe haven US Dollar (USD) plunged at the end of last week, knocked by market optimism around the US and China finally reaching a preliminary deal on trade.
Investors piled into riskier trade-correlated currencies in reaction to the news, leaving the safe US Dollar tumbling.
On top of this, recent notable US data has been weak, keeping investors concerned that the Federal Reserve could be pressured into becoming more dovish. These have been the primary causes of USD weakness in recent sessions.
However, analysts continue to warn that the worsening of US-China tensions remains a persisting risk as negotiations are ongoing.
The broad market optimism surrounding talks wore off somewhat yesterday, and markets are once again anxious about the remaining uncertainties of future trade negotiations.
This, as well as some stronger US production stats yesterday, have helped the US Dollar to push EUR/USD lower again.
Euro to US Dollar (EUR/USD) Exchange Rate Awaits Trade News and Major Data
Now that market optimism around the US-China trade deal has calmed, investors are eagerly awaiting to see the next steps for negotiations.
If US-China trade relations appear to keep improving, the Euro to US Dollar (EUR/USD) exchange rate could advance again as the safe haven US Dollar’s (USD) appeal would be limited.
Aside from trade news, EUR/USD could be influenced by major Eurozone and US data over the coming days.
Tomorrow will see the publication of France’s December business confidence results and US existing home sales.
Friday’s data will be even more influential, however. Key data including German and Eurozone consumer confidence, as well as US growth and PCE inflation data, will be published.
If Eurozone data shows more signs of strength, it could boost hopes of a Eurozone economic recovery and boost the Euro to US Dollar (EUR/USD) exchange rate.