EUR/USD Exchange Rate Rises as Eurozone Struggles From Covid-19 Uncertainty
The Euro to US Dollar (EUR/USD) exchange rate rose by 0.3% today, with the pairing currently fluctuating around $1.17.
The Euro (EUR) rose today after its biggest competitor, the US Dollar, shed gains on improving risk sentiment ahead of the US presidential debate between Donald Trump and Joe Biden. As a result, the single currency has benefited from a weaker Dollar.
However, fears for the Eurozone’s economic performance in the months ahead has clipped some of the single currency’s gains.
The European Central Bank’s (ECB) President, Christine Lagarde, was also dovish about the Eurozone’s economy, saying:
‘We are still feeling the impact of the coronavirus pandemic across the euro area. Businesses are facing difficulties, people are losing their jobs, and prospects for the future remain uncertain.’
‘While euro area economic activity rebounded in the third quarter, the recovery remains incomplete, uncertain and uneven.’
In Eurozone economic data, today saw the release of the flash German Harmonized Index of Consumer Prices figure for September.
The figure fell below forecasts to -0.4%, leaving investors concerned for the Eurozone’s largest economy.
Analysts at Reuters highlighted how many uncertainties the Eurozone is facing, saying:
‘Germany’s inflation reading missed forecasts ahead of a reading for the euro zone, and divisions widen between policymakers on how to react to a second COVID wave.’
US Dollar (USD) Falls as US Presidential Debate Dominates Focus
The US Dollar (USD) fell today because of rising risk-sentiment following encouraging Chinese economic data.
China’s factory profits rose for a fourth consecutive month this week, sparking demand for riskier assets as the world’s second largest economy continues to grow.
Meanwhile, attention as turned to the US Presidential election debate between Trump and Biden, leaving investors wary of the ‘Greenback’ as the nation’s political uncertainty grows.
Jasper Lawler of London Capital Group commented:
‘A big upset by Trump could unearth some market volatility as investors re-price a possible Trump second term – or maybe worse – a contested election result and even bigger delays until the next stimulus package gets passed.’
In other US news, today will see a slew of US Federal Reserve speakers deliver a speech.
If any of them are notably dovish about the American economy, we could see the ‘Greenback’ suffer as uncertainties grow for the world’s largest economy.
EUR/USD Forecast: Could US Political Uncertainties Continue to Drag on the ‘Greenback’?
Euro (EUR) traders will be awaiting tomorrow’s release of Germany’s Unemployment Rate for September. Any signs of rising unemployment in the Eurozone’s powerhouse economy would prove EUR-negative.
Tomorrow will also see the release of the German Retail Sales figure for August. If this rises, then the Euro could hold onto today’s gains.
US Dollar (USD) investors will be looking ahead to tomorrow’s US GDP figure for the second quarter. If the US economy continues to suffer, then the ‘Greenback’ could continue to head south.
The EUR/USD exchange rate could continue to head higher this week if US political uncertainties continue to weigh on the appeal of the ‘Greenback’.