Euro to US Dollar Exchange Rate as Outlook for Eurozone’s Economy Remains Uncertain
The Euro to US Dollar exchange rate held steady today, with the pairing currently fluctuating around $1.21.
The single currency held steady against the US Dollar today following the publication of December’s Eurozone Industrial Production data, which fell below forecasts by -1.6%.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, commented on the data:
‘The setback in December didn’t dent the Q4 performance much. The rebound will lose momentum in Q1 but the surveys suggest that there is plenty left in the tank for a continued rebound.’
Meanwhile, the European Union’s (EU) slow vaccination rollout has left many single currency investors concerned that Europe’s lockdowns could be extended.
Added to this, the outlook for the Eurozone’s economy remains uncertain. A slow Covid-19 vaccination programme limits the speed of which the bloc can recover its economy in the months ahead.
In European political news, however, the former European Central Bank chief has been sworn in as Italy’s new Prime Minister.
As a result, some EUR investors are hopeful that this could restore political stability to Italy going forward.
US Dollar Steady as Risk-On Mood Limits Appeal of Safe-Haven Currencies
The US Dollar held steady against the Euro today as positive risk-sentiment has limited the appeal of the safe-haven ‘Greenback’.
Analysts at Reuters explain:
‘The safe haven dollar started the week pinned near two-week lows on Monday, as optimism about COVID-19 vaccine rollouts and a planned $1.9 trillion U.S. stimulus package drove up riskier currencies and stock markets across Europe and Asia.’
Now that the UK has vaccinated 15-million people, and with many countries not far behind, investors are becoming more hopeful for the global economy.
Additionally, the global Covid-19 infection rate continues to dip, sparking optimism over the global economy’s ability to recover in the months ahead.
US markets are closed today for the bank holiday President’s Day.
As a result, the ‘Greenback’ has remained relatively static against the single currency.
EUR/USD Forecast: Could US Stimulus Hopes Drag Down the Safe-Haven ‘Greenback’?
Euro traders will be looking ahead to tomorrow’s release of the flash Eurozone GDP data for the fourth-quarter.
Any indications that the Eurozone’s economy was struggling in the final quarter of last month would be EUR-negative.
Tomorrow will also see the release of February’s Eurozone ZEW Survey of Economic Sentiment. If this shows a significant downturn, then we would see the single currency fall.
The EUR/USD exchange rate could head higher, however, if optimism continues to grow over the US $1.9 trillion stimulus package. This would further weaken demand for the safe-haven US Dollar.