The Euro US Dollar (EUR/USD) exchange rate has weakened this morning after Eurozone GDP for Q1 remained in contraction.
At the time of writing the EUR/USD exchange rate is trading at around $1.2096 as the US Dollar finds continued support from the latest US GDP figures yesterday.
Euro (EUR) Weakens on Eurozone GDP Data for Q1
The Euro has weakened against the US Dollar this morning as the latest Eurozone GDP data remained in contraction for Q1, coming in at -0.6%, and falling into a double dip recession, the second consecutive quarter of contraction.
As reported by Reuters:
‘The Eurozone economy shrank less than expected in the first three months of the year, preliminary data showed on Friday, while headline inflation picked up as expected on a surge in energy prices.’
‘The drop reinforces calls by European Central Bank doves to maintain the stimulus to the economy and hold off on tapering the pandemic bond purchases until the growth rebound fully materialises.’
More so, the Eurozone’s largest economy, Germany’s GDP missed forecasts and contracted to -1.7% during Q1 as a surge in coronavirus cases caused stricter lockdowns to be imposed in the country.
Eurozone unemployment in March did drop to 8.1% however, with the number of unemployed declining by 209 thousand from the previous month to 13.166 million across the bloc.
Furthermore, Eurozone inflation hit forecasts of 1.6%, rising from March’s 1.3%, the rise could see increased optimism surrounding the Eurozone’s economy might recovering in Q2.
US Dollar (USD) Supported US GDP Data
The US Dollar has strengthened against the Euro this morning as the broad weakness in the Euro helps push the US Dollar higher.
The US Dollar has recovered following the Federal Reserve’s latest cautious but positive tone surrounding the US’s fast-paced recovery from the coronavirus pandemic which had caused the US Dollar to plummet
The release of the latest GDP from the US helped to reserve the losses from the Federal Reserve’s comments the day before.
The latest US jobless claims released yesterday afternoon further fell to pre-pandemic levels, adding further support to the ‘Greenback.’
Even more so, this afternoon US Dollar traders will be keeping an eye on the latest personal income and personal spending data from the US for March which are both expected to soar as many American’s received their stimulus checks during the month.
Euro US Dollar Exchange Rate Outlook: Manufacturing PMI’s in Focus
Heading into next week, both Euro and US Dollar traders will be focusing on the latest manufacturing PMI’s for March.
Manufacturing is expected to have risen in both the Eurozone and the US as they both recover from the worst of the coronavirus pandemic
In addition, the latest retail sales from Germany could drag down the Euro further as they are expected to have fallen to 0.3% in March as a stricter lockdown was imposed in the country to combat the third wave of coronavirus.