EUR/USD Exchange Rate Falls as Risk-Off Markets Boost ‘Greenback’
The Euro to US Dollar (EUR/USD) exchange rate dipped today, with the pairing currently trading around $1.12.
The US Dollar (USD) rose today as fears over a global outbreak of a second wave of coronavirus cases has increased market demand for safe-haven currencies.
As a result, the ‘Greenback’ has shown some recovery despite concerns over America’s domestic Covid-19 crisis.
John Doyle, the vice president of dealing and trading, at Tempus, Inc., commented:
‘Risk is off a little bit, so you’re seeing the dollar gaining a little bit. But it’s not a crazy risk-off day.’
In US economic news, today saw the release of Chicago’s PMI index for June, which fell to a worse-than-expected 36.6, despite forecasts of an increase to 45.
Consequently, some USD investors are becoming concerned for the world’s largest economy’s recovery in the months ahead.
Jerome Powell, the Federal Reserve’s Chairman, has also warned that there is a great deal of uncertainty ahead for the US economy.
Mr Powell commented:
‘We have entered an important new phase and have done so sooner than expected.’
‘While this bounceback in economic activity is welcome, it also presents new challenges —notably, the need to keep the virus in check.’
Euro (EUR) Sinks Despite Eurozone’s Inflation Data Defying Expectations
The Euro (EUR) fell against the ‘Greenback’ today despite Eurozone inflation defying expectations and rising in June.
Today saw the release of the flash Eurozone CPI data, which saw the core figure rise by 0.8%, while the headline figure beat forecasts at 0.3%.
Bert Colijn, the Senior Economist for the Eurozone at ING, was downbeat in his analysis, saying:
‘Overall, as unemployment is set to continue to rise in the months ahead and output remains well below the 4Q19 levels for a long time to come, inflation is unlikely to move anywhere close to the European Central Bank’s target of just below 2% in the near term.’
Meanwhile, single currency investors are beginning to become a bit more hopefully, however, after yesterday saw Europe’s economic sentiment uptick in June.
EUR/USD Forecast: Could Covid-19 Second Wave Fears Boost the US Dollar?
Euro (EUR) investors will be looking ahead to tomorrow’s release of Germany’s Unemployment Rate figures for June. Any signs of an increase would prove EUR-negative.
Tomorrow will also see the release of German’s Markit Manufacturing PMI for June. If this shows any signs of improvement, we could see the single currency benefit as the Eurozone’s largest economy begins to show signs of recovery.
US Dollar (USD) traders will be awaiting tomorrow’s release of the latest US manufacturing data for June. Any signs of improvement in America’s economic performance could benefit the ‘Greenback’ as investors become more confident about the world’s largest economy.
The EUR/USD exchange rate will likely remain subdued throughout this week as investors continue to flock to safe-haven currencies as fears of a second-wave of coronavirus dampen market confidence.