EUR/USD Exchange Rate Falls Further on US Economic Recovery Hopes
Since touching impressive highs at the end of February, the Euro to US Dollar (EUR/USD) exchange rate has been plummeting and shedding its ground. Investors are buying the US Dollar (USD) in a rebound rally due to hopes that the US economy will recover.
At the end of February, EUR/USD touched on a high of 1.2239, but has since plunged back down. Last week saw EUR/USD open at the level of 1.2072 and shed around a cent and a half, closing at the level of 1.1912.
EUR/USD has continued its tumble this week so far. At the time of writing, EUR/USD is trending near a low of 1.1861, the lowest level for the pair in 3 months since November 2020.
Slews of key Eurozone and US data, as well as the European Central Bank’s (ECB) March policy decision, could influence the Euro to US Dollar exchange rate this week.
Euro (EUR) Exchange Rates Remains Unappealing While Rivals Rebound
The US Dollar is the Euro’s biggest rival. As a result, the two currencies often share something of a negative correlation.
It is due to this negative correlation that a surge in US Dollar demand has been weakening the Euro since last week.
Progress in huge US fiscal stimulus combined with stronger than expected US Non-Farm Payrolls data boosted the US Dollar last week, weakening the Euro in turn.
What’s more, today’s German industrial production results disappointed investors as well. This further dampened the Euro’s appeal, keeping EUR/USD movement driven largely by US Dollar strength for now instead.
US Dollar (USD) Exchange Rates Remain Appealing after Last Week’s Rebound
Last week, news that a huge US fiscal stimulus package was getting closer to reality led to a surge in demand for the US Dollar.
The US Dollar rebounded from its recent lows and has continued to rally in rebound since. According to Valeria Bednarik, Chief Analyst at FXStreet:
‘The US Senate passed President Joe Biden’s stimulus bill with some changes, and it has now moved back to the House, where a vote is expected on Tuesday. The news adds support to the greenback and maintains equities afloat.’
Euro to US Dollar (EUR/USD) Exchange Rate Awaits Key Eurozone Data
The coming week could be an influential one for the Euro to US Dollar exchange rate. Many key Eurozone ecostats are on the way, as well as the European Central Bank’s (ECB) March policy decision.
Tomorrow will see the publication of Eurozone employment and growth rate data from Q4. If it falls short of expectation the US Dollar could push EUR/USD even lower.
However, if Eurozone data is stronger than expected or the ECB is surprisingly hawkish on Thursday, EUR/USD may have a better chance of recovering some recent losses as well.
Also on the way is key US data, including inflation rate results on Wednesday and Michigan confidence data on Friday.
Of course, any surprising developments in the Eurozone or US coronavirus situations could also influence the Euro to US Dollar (EUR/USD) exchange rate.