Euro to US Dollar Exchange Rate Struggles to Advance amid Gloomy Eurozone Outlook
The Euro to US Dollar (EUR/USD) exchange rate’s bearish run continues this week. A lack of support for the Euro (EUR) combined with fresh strength in the US Dollar (USD) is keeping the pair near its worst levels in years.
Last week saw EUR/USD tumble from the interbank level of 1.09 to 1.08. The pair has seen even further losses this week.
EUR/USD currently trends in the interbank region of 1.07. The pair is trending just above its lowest levels in almost three years, since April 2017.
Investors may not have much reason to buy the Euro in the coming sessions, unless tomorrow’s Eurozone PMI projections show fresh signs of recovery for the bloc. Global factors are keeping the US Dollar in favour.
Euro (EUR) Exchange Rates Lack Support and Eurozone Outlook Remains Gloomy
A recent period of hopeful Eurozone data has been short-lived. Instead, concerns of further slowdown in the Eurozone economy are returning.
Fresh concerns of global slowdown have hit markets due to the coronavirus outbreak, which has been spreading since January.
Attempts to prevent the coronavirus spread have meant limiting travel and trade. This is impacting economic activity.
As a result, the Eurozone economy has not been able to see much of a rebound from last year’s slow performance. This week’s Eurozone data shows that economic sentiment has slumped again in February, and Eurozone construction output has unexpectedly seen a deep contraction.
Amid a lack of strong data and concerns of lasting Eurozone slowdown, the Euro (EUR) has been broadly unappealing. It is struggling to recover from recent lows against strengthening rivals.
US Dollar (USD) Exchange Rates Tearing Higher on Economic Hopes
The US Dollar (USD) has been on a bullish run this week. Both domestic and global factors leave it among the market’s most appealing major currencies.
US data has been decent and continues to indicate resilience in the US economic outlook.
The Federal Reserve’s latest meeting minutes have only made the US Dollar more bullish. The minutes report was cautiously optimistic overall, with the bank generally signalling that monetary policy would be left frozen this year rather than cut or hiked again.
This was despite the risk the coronavirus posed to the global economy. The bank did express caution over the potential risks of the coronavirus, but remained more optimistic than dovish.
Coronavirus jitters themselves have boosted the US Dollar. The US currency is a safe haven currency, but as concerns over virus spreading soften slightly the US Dollar is benefitting from losses in safer rivals like the Japanese Yen (JPY).
Euro to US Dollar (EUR/USD) Exchange Rate Outlook Could Shift if PMI Data Surprises
For now, investors have little reason to buy the Euro (EUR) due to lingering concerns over the Eurozone economic outlook.
Euro investors are still watching carefully for signs of recovery in the Eurozone outlook though. As a result, upcoming key Eurozone data could be highly influential if it surprises investors.
Eurozone PMI projections for this month will be published tomorrow. They are expected to weaken in many key prints, so if they fall short of forecasts EUR/USD could see even deeper losses before markets close for the week.
Also due tomorrow is Eurozone inflation rate data. Highly disappointing Eurozone inflation could put fresh pressure on the European Central Bank (ECB) to take a more dovish stance on monetary policy.
On the other hand, if data impresses investors it could help the Euro to begin to mount a more solid recovery against the US Dollar.
US PMI projections are also due tomorrow. However, shifts in coronavirus sentiment are more likely to drive the US Dollar’s movement and the Euro to US Dollar (EUR/USD) exchange rate.