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Euro to Australian Dollar Struggles to Find Footing as Market Optimism Boosts ‘Aussie’

Euro to Australian Dollar Exchange Rate Lacks Drive as Eurozone Stats Miss the Mark 

After a brief rise in safe haven demand near the beginning of the week, market sentiment is rising and the Euro to Australian Dollar (EUR/AUD) exchange rate is once again sliding. US political speculation is boosting the risk and trade-correlated Australian Dollar (AUD). 

EUR/AUD opened this week at the level of 1.5832. At the beginning of the week, the pair dipped and touched on a 2-year-low of 1.5652. 

Then EUR/AUD rebounded and spent much of the last few days attempting recovery. However this was short-lived, and at the time of writing EUR/AUD trends just below the week’s opening levels again. 

The Eurozone outlook is still relatively resilient. However the Australian Dollar could keep rising on market sentiment instead. 

Euro (EUR) Exchange Rate Appeal Limited as Data Misses the Mark 

The Eurozone has been perceived as weathering the coronavirus pandemic better than other major economies like the UK and US. As a result, the bloc’s outlook keeps the Euro (EUR) relatively appealing. 

However, coronavirus restrictions will be extended in major economies like Germany. Today’s Eurozone data also fell short of expectations. 

Today saw the publication of the Eurozone’s final December services and composite PMIs. The data fell short of projections, but still indicated that the Eurozone economy was recovering. 

This data limited the Euro’s appeal, especially against currencies more associated with risk and trade. 

Australian Dollar (AUD) Bolstered as US Politics Boost Market Sentiment 

The rise in safe haven demand seen earlier in the week was short-lived. Today, market sentiment is rising again as investors react to the latest developments in the US. 

The US Democratic Party appears likely to gain control of the Senate as a result of this week’s Georgia Senate runoff.  

This is perceived as boosting the chances of US fiscal stimulus to support the nation through the coronavirus pandemic. As a result, investors are more willing to take risks and this has boosted the Australian Dollar. 

News that Australia had brought its coronavirus vaccine rollout forward slightly, to early-March, also supported the Australian Dollar. 

Euro to Australian Dollar (EUR/AUD) Exchange Rate Could Firm if Eurozone Data Impresses 

Tomorrow will see the publication of some of this week’s most influential Eurozone datasets. If they impress investors, they could make the Euro more appealing. 

November retail sales results could be the most influential data of the day. It will give markets a better idea of how the Eurozone’s economic activity is weathering coronavirus restrictions. 

Eurozone inflation and confidence figures from December, as well as German factory sales for November, will also be closely watched. 

The Euro’s movement will be moved more by data and rival strength. While tomorrow’s Australian trade balance report could cause movement, AUD will be influenced more by shifts in risk-sentiment. 

If the US political situation or coronavirus recovery hopes improve, investors will be more willing to take risks. This could make the already strong ‘Aussie’ even more appealing. 

On the other hand, the Euro to Australian Dollar (EUR/AUD) exchange rate is more likely to rise if markets are shocked and look for safer investments.