Euro US Dollar Exchange Rate Supported by Worse-Than-Expected US Jobless Claims

The Euro US Dollar (EUR/USD) exchange rate is being supported during today’s session following a worse-than-expected increase in US Jobless claims for the first week of April.

At the time of writing, the EUR/USD pairing is trading around $1.1906, although the Euro could find its gains limited by the deteriorating coronavirus situation in the Eurozone.

Euro (EUR) Supported by Eurozone Construction PMI

The Euro has found against the US Dollar today following a fractional growth in the Eurozone’s construction sector for March.

Although the construction PMI remains in contraction territory, the latest decline from the Eurozone was slowest since October of 2020, coming in at 49.3.

Usamah Bhatti, an economist at IHS Markit, commented on the data saying:

‘Eurozone construction companies reported fractional growth in March, marking for the first increase since the pandemic disrupted activity across the bloc throughout 2020.’

‘Incoming business also expanded in the latest survey period, as the appetite for new construction projects in the Eurozone began to return, reportedly in public sector work.’

The Eurozone is still struggling against the third wave of the coronavirus pandemic however, and the German chancellor Angela Merkel has shown supported for a tougher lockdown in the Eurozone’s largest economy which could add pressure to EUR.

US Dollar (USD) Falls as US Jobless Claims Rise

The US Dollar has fallen against many of its counterparts today after the most recent US jobless claims missed forecasts and increased to 744k for the week ending April 3rd.

The rise in US jobless claims has further proven the coronavirus pandemic is continuing to wreak havoc on the US despite despite strong economic data over the Easter weekend and nearly one quarter of US adults now being fully vaccinated.

Mark Hamrick, senior economic analyst at remained optimistic despite the second consecutive week of an increase in jobless claims, saying:

‘The movement overall is in the right direction, as we get closer to herd immunity, as restrictions can be lifted—think about dining rooms that can go from 50% to 100% capacity and baseball stadiums that can be 100% instead of 10%–those are things that get us closer to where we were before.’

The figures backed up the minutes from the Federal Open Market Committee regarding rising inflation yesterday which caused a pullback in the US Dollar, the minutes read:

‘Most participants noted that they viewed the risks to the outlook for inflation as broadly balanced.’

‘Several remarked that supply disruptions and strong demand could push up price inflation more than anticipated. Several participants commented that the factors that had contributed to low inflation during the previous expansion could again exert more downward pressure on inflation than expected.’

Euro US Dollar Exchange Rate Outlook: German Trade Surplus in Focus

For Euro investors, tomorrow will see the release of Germany’s most recent balance of trade data which is forecast to increase to €21.5B. The Euro could see itself heading higher if the figures meets forecasts.

US Dollar (USD) traders will themselves be keeping an eye on tomorrow’s release of the latest Producer Price Index figure for March.

If the price index shows any signs of improvement it would cause the US Dollar to rebound.

The EUR/USD exchange rate will continue to be driven by any further coronavirus developments.

Any stricter lockdowns imposed across the Eurozone would drag EUR down.

Georgina Clissold

Contact Georgina Clissold