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EUR/USD Exchange Rate Trends Near 2-Year-Best Once Again amid Vaccine Optimism

EUR/USD Exchange Rate Trends Near Best Levels since Early 2018 

The Euro to US Dollar (EUR/USD) exchange rate has seen yet another surge in demand since markets opened this week, as the US Dollar (USD) is once again hit lower by market sentiment. The Euro (EUR) outlook remains fairly optimistic as the Eurozone weathers the coronavirus pandemic. 

Last week saw mixed movement in EUR/USD, after the pair opened the week at the level of 1.2200. While the pair spent most of the week trending higher, even touching a new 2-year-best of 1.2309 later in the week, the pair ultimately slipped from these highs. 

EUR/USD closed the week near the level of 1.2180. 

Since markets opened today though, EUR/USD has seen yet another bounce higher. At the time of writing on Monday afternoon, EUR/USD trends just around last week’s best levels. These are the best levels for EUR/USD since early 2018. 

Euro (EUR) Exchange Rates Remain Resilient amid Coronavirus Vaccine Hopes 

Despite news that Germany is extending its lockdown until the 31st of January, the Euro remains fairly appealing today. 

The Euro has been able to sustain gains against its rival, the US Dollar. This is largely due to US Dollar losses, but some resilience in the Eurozone outlook is helping the Euro as well. 

Today’s Eurozone manufacturing PMI data fell slightly short of expectations, but was still the best manufacturing PMI for the Eurozone in two and a half years. 

What’s more, the Euro is benefitting from Brexit relief. The UK and EU successfully implemented a post-Brexit trade deal, which has been a relief to Eurozone markets. This is boosting the Pound (GBP) most of all, but the Euro is benefitting as well. 

US Dollar (USD) Exchange Rates Unappealing as Coronavirus Vaccine Rollout Boosts Sentiment 

The safe haven US Dollar has once again been weakening in recent sessions. Investors have little reason to buy safe havens as optimism about a rebound from the coronavirus pandemic continues to rise. 

Coronavirus vaccines continue to roll out across major economies. Today saw the first public usage of the Oxford/AstraZeneca vaccine. 

Optimism about more vaccines is boosting hopes that surges in cases will be tackled in the coming months. 

This, combined with low US interest rates and some limited US political uncertainty, is weighing on the safe US Dollar’s appeal. 

Euro to US Dollar (EUR/USD) Exchange Rate Could Keep Climbing 

The Eurozone outlook remains fairly steady, and the US Dollar remains unappealing as markets become more optimistic about the coronavirus recovery outlook. 

As a result, the Euro to US Dollar exchange rate may have further to climb. EUR/USD could reach even higher than its current multi-year best if demand for the pair improves further. 

Demand for the Euro could be further supported if upcoming Eurozone data impresses investors. Tomorrow will see the publication of Germany’s latest German retail sales and unemployment stats. 

If US manufacturing PMI data disappoints tomorrow, this could also make the unappealing US Dollar even less appealing. 

On the other hand though, the US Dollar could see stronger demand if markets become more anxious again. 

If there is a fresh complication in the coronavirus pandemic, or if US political uncertainty worsens, safe haven demand could boost the US Dollar. 

If upcoming US Senate elections in Georgia lead to a shift in the Senate’s power, fresh uncertainty could knock EUR/USD lower as the safe haven US Dollar could strengthen.