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Euro to South African Rand Exchange Rate Rebounds Slightly as Last Week’s Rand Rally Unravels

Euro to South African Rand Exchange Rate Climbs despite Fears of German Recession

Last week saw the Euro to South African Rand (EUR/ZAR) exchange rate plunge due to a combination of disappointment in Eurozone ecostats and market demand for risky emerging market currencies like the South African Rand (ZAR).

After opening last week at the level of 15.53, EUR/ZAR briefly edged higher before tumbling in the second half of the week. EUR/ZAR touched on a half-year-low of 15.16 on Thursday before edging higher and closing the week at the level of 15.26.

When markets opened on Monday though, EUR/ZAR continued to recover from Thursday’s lows as investors sold the Rand in profit-taking. At the time of writing, EUR/ZAR was trending closer to the level of 15.30.

While market demand for the Euro (EUR) was limited due to weak Eurozone data and concerns that more parts of the Eurozone economy could see recession during a global economic slowdown, the shared currency avoided losses today.

Euro (EUR) Exchange Rate Gains Limited by Eurozone Economic Jitters

The Euro’s recovery versus a weaker South African Rand was limited today, as appetite for the shared currency was weighed by recent weakness in Eurozone data and building concerns about the bloc’s slowing economic outlook.

Last week saw the publication of numerous German ecostats, most of which came in worse than forecast and indicated that Germany’s economic slowdown may last longer than previously expected.

On top of this, some analysts believe Germany may even be headed towards recession unless data improves. It follows last week’s news that Italy had also entered a technical recession.

Fresh Eurozone data this week hasn’t given investors much to be optimistic about either. Sentix’s latest Eurozone investor morale figure hit its lowest level in over four years.

However, this was due more to Brexit concerns than fears about the Eurozone’s economic outlook. European Central Bank (ECB) policymaker Ewald Nowotny also reassured markets today that the Eurozone was not facing a recession despite slowdown concerns.

South African Rand (ZAR) Exchange Rates Sold Following January Surge

The Euro to South African Rand exchange rate hit its worst levels in six months at the end of January, and this was largely due to surging demand for the South African Rand for much of the past month.

Due to market uncertainties about the Federal Reserve’s US policy outlook for 2019, the US Dollar (USD) had a weak start to 2019 which also led to a rally in market demand for riskier emerging market currencies.

The South African Rand benefitted from this rally for most of the past month and even saw an additional boost last week, when the Federal Reserve held its January policy decision and took a more cautious stance.

With the January rally over with however, and persisting market jitters about US-China trade tensions, the South African Rand has slipped since Friday last week and remained unappealing today.

Euro to South African Rand (EUR/ZAR) Exchange Rate Investors Anticipate Further Eurozone Data

The Euro to South African Rand exchange rate is climbing today as the Rand is sold off in profit-taking, but the Euro’s gains have been limited due to concerns over weak Eurozone data.

As a result, EUR/ZAR is more likely to sustain bigger gains if upcoming Eurozone data impresses investors over the coming days.

Tuesday will see the publication of the Eurozone’s final January services and composite PMI stats, as well as Eurozone retail sales results from December.

If the data beats expectations it could cause some relief over fears of the Eurozone economic slowdown.

With concerns about Germany’s economy also weighing on the Euro, German factory orders, industrial production and trade figures due later in the week may also prove influential.

The South African Rand, on the other hand, could be influenced by South Africa’s business confidence stats tomorrow.

News that influences risk-sentiment and emerging market currencies like the Rand is more likely to cause Euro to South African Rand (EUR/ZAR) exchange rate movement however.