Euro US Dollar (EUR/USD) Exchange Rate Edged Higher as US Jobless Claims to Exceed Two Million
UPDATE: The Euro US Dollar (EUR/USD) exchange rate traded at around 0.5% higher on Friday afternoon. This left the pairing trading at around $1.0721.
This afternoon’s data revealed that US home sales rallied to a 13-year high in February.
However, this was likely to be ruined by the coronavirus pandemic, which has left the US economy on the brink of a recession.
Economists have warned that jobless claims could exceed two million next week as the pandemic sparked a wave of layoffs.
US Dollar (USD) Set for Largest Weekly Gain Since 2008
The Euro US Dollar (EUR/USD) exchange rate jumped over 1.2% this morning, leaving the pairing trading at around $1.0794.
The US Dollar lost some steam on Friday, pausing after this week’s rally left the currency set for its biggest weekly gain since the global financial crisis in 2008.
The coronavirus pandemic sparked investors’ appetite for the safe-haven US Dollar, sending the currency up around 3.5% against its rivals.
USD made significant gains this week despite central banks across the world easing policy and pumping cheap Dollars into banks.
Commenting on this, Nomura executive, Stuart Oakley said:
‘People are selling everything and the common thread is they just want cash.
‘People just want cash because at the end of the day, people don’t know where their next revenue is coming from and they’ve got payments to meet. I don’t think that’s going to change.’
Anxieties intensified, as California issued a stay-at-home order for its 40 million residents as Covid-19 cases increased in the US.
According to Bank of America FX analyst, Ben Randol:
‘The US Dollar is doing what it should be doing in times like these: appreciating.
‘We think that the US Dollar will continue to appreciate in unstable financial markets on most pairs potentially except Yen and Swiss Franc.’
Yesterday: EUR/USD Suffers Largest One-Day Loss Since 2016
On Thursday, the Euro plummeted to its lowest level since April 2017 against the ‘Greenback’ as traders flocked to the safe-haven.
Added to this, EUR/USD suffered its largest one-day loss since June 2016.
With Italy’s death toll overtaking that of China, Europe has become the new epicentre of the coronavirus.
Investors sold everything to move their money into USD due to heightened fears the coronavirus would push the global economy into a recession.
Traders even shed traditional safe-haven currencies such as the Japanese Yen (JPY) and Swiss Franc (CHF) in favour of the ‘Greenback’.
Although, Friday saw the Dollar rally cool and left the single currency trading around 1% higher
Euro US Dollar Outlook: Will EUR/USD Extend This Week’s Slump?
Looking ahead, the Euro (EUR) could suffer further losses against the US Dollar (USD) following the release of Germany’s import price data.
If February’s import prices plummet, the single currency will slump.
Meanwhile, the spread of the coronavirus pandemic is likely to remain the main catalyst for movement of the pairing.
If traders continue to sell off assets in favour of cash, the ‘Greenback’ will extend this week’s rally. This will send the Euro US Dollar (EUR/USD) exchange rate lower.