The Euro to US Dollar (EUR/USD) exchange rate dropped today, with the pairing currently trading around $1.2124.
The Euro (EUR) fell today following the release of Germany’s GfK Consumer Confidence report for February, which fell sharply from -7.5 to -15.6, the weakest figures in eight months.
Rolf Bürkl, a consumer specialist at GfK, commented on the report:
‘Consumer sentiment is facing difficult challenges. If it is to recover sustainably, infection rates will need to decrease more than they have to date so that the measures can be relaxed significantly. This means that we will need to wait a while before we see the recovery that many had been hoping for this year.’
As a result of the disappointing figures from Germany, confidence in the Eurozone’s economy has dropped as the second wave of the coronavirus pandemic continues to wreak havoc.
Italy has also struggled today as Prime Minister Giuseppe Conte resigns, leaving the country in political limbo.
US Dollar (USD) Gains on Global Risk Aversion
The US Dollar has continued to be supported today as global markets remain cautious over the state of the coronavirus pandemic.
With rising Covid-19 cases and delayed vaccine rollouts, global markets are increasingly jittery over the impact of the coronavirus pandemic in the coming months, pushing investors to buy the safe-haven ‘Greenback.’
In US economic news, today will see the Federal Reserve’s interest rate decision.
Though no policy changes are expected from the Federal Reserve this month, the Fed is likely to welcome Biden’s efforts to pour more stimulus to aid the USA’s economic recovery from the pandemic.
The Fed is expected however, to commit to its lower interest rates and bond-buying programme to help to support the recovery, a decision which could cause the US Dollar to weaken.
The US durable goods orders disappointed this afternoon, data showed they edged up 0.2 percent month-on-month in December, though it is the 8th consecutive gain in orders.
EUR/USD Outlook: Eurozone Consumer Confidence to Cause Euro More Losses?
Euro traders will be looking towards tomorrow’s release of the latest Eurozone Consumer Confidence and Business Climate data for January.
If the data suggests that the Eurozone is continuing to struggle against the impacts of the coronavirus pandemic EUR will suffer.
EUR traders will also be awaiting a speech from a member of the ECB’s executive board, Isabel Schnabel tomorrow.
If she is notably dovish in her outlook for the bloc’s economy, then the EUR/USD exchange rate would fall further.
USD traders will focus on any global coronavirus developments which could push the US Dollar higher.
Investors will also be keeping a close eye on the Fed’s interest rate decision later this evening.