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Euro to Australian Dollar Exchange Rate Slumps amid Fresh Risk-On Rally

Euro to Australian Dollar Continues to Slide as ‘Aussie’ Finds Stronger Support

Optimistic developments in US-China trade negotiations have made investors more eager to take risks this week, leading to demand for the Australian Dollar (AUD) and pushing the Euro to Australian Dollar (EUR/AUD) exchange rate lower.

After opening this week at the level of 1.5968, EUR/AUD has largely trended with a downside bias this week due to risk-sentiment.

Australian data also supported the ‘Aussie’, and at the time of writing EUR/AUD was trending closer to the level of 1.5900.

As the Euro (EUR) has been lacking in support amid poor ecostats and German recession jitters, the Australian Dollar has found it easier to push EUR/AUD lower.

While some Australian data has been optimistic this week, the primary reason for Australian Dollar gains has been speculation that the US and China are getting closer to agreeing some kind of trade deal.

Euro (EUR) Exchange Rates Unappealing as Growth Concerns Build

Investors have had little reason to buy the Euro this week, as the Eurozone’s economic outlook continues to slow and recent data has been underwhelming.

Last week saw a slew of ecostats indicating that not only was Germany’s economic slowdown likely to last longer than previously expected, but concerns that the nation could be headed towards a recession too.

As Germany is the Eurozone’s biggest economy, the possibility of a recession in the nation has made the Euro highly unappealing.

No notable Eurozone data has been published so far this week, but with global growth still looking to slow and major trade uncertainties still present, investors are becoming more concerned that more trouble is ahead for Germany’s economy.

Australian Dollar (AUD) Exchange Rates Climb as Trade Developments Bolster Risk-Sentiment

Demand for the Australian Dollar was poor last week, as trade jitters made risky trade-correlated currencies unappealing and Reserve Bank of Australia (RBA) interest rate cut bets worsened.

However, this week so far US-China trade negotiations have resumed and perceived progress in talks have made investors less hesitant to take risks again.

Overnight, US President Donald Trump indicated that he would be willing to extend the March deadline to reach a trade deal with China, in the event that trade negotiations are going well.

The US and China are currently under a trade truce, but at the beginning of March the US is set to resume in hiking up US tariffs on Chinese goods.

Markets are anxious that if tariffs rise again, the trade war could worsen rather than a resolution being found. As a result, Trump’s comments were somewhat relieving to investors and markets were more willing to take risks.

The Australian Dollar has also been supported by this week’s Australian confidence stats. NAB’s business confidence and Westpac’s consumer confidence figures both beat expectations.

Euro to Australian Dollar (EUR/AUD) Exchange Rate Investors Anticipate Eurozone Growth Stats

The Euro to Australian Dollar exchange rate will continue to tumble in the coming days if US-China trade negotiations go well, as investors find risky currencies more appealing and buy the Australian Dollar.

Upcoming Australian data is unlikely to be as influential, but Thursday’s Australian consumer inflation expectations stats could still support the Australian Dollar if they beat expectations.

However, the biggest focus for EUR/AUD investors in the coming sessions will be the Eurozone’s upcoming datasets.

On Thursday, major ecostats including Gross Domestic Product (GDP) growth stats from Germany and the Eurozone, as well as Germany’s January wholesale prices and the Eurozone’s Q4 employment change projections will be published.

These will be followed on Friday by the Eurozone’s December trade balance results.

The biggest focus will be on Germany’s growth data. If Germany’s growth projections beat expectations they could bolster hopes that Germany’s economy is resilient.

This would bolster Euro to Australian Dollar (EUR/AUD) exchange rate demand towards the end of the week.