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Euro to US Dollar (EUR/USD) Exchange Rate Falls as Covid-19 Cases Rise Throughout Europe

EUR/USD Exchange Rate as Eurozone Economy Falters Amid Growing Covid-19 Infections

The Euro to US Dollar (EUR/USD) exchange rate fell by -0.3% today, with the pairing currently fluctuating around $1.177.

The Euro (EUR) suffered today as Europe looks set to implement harsher restrictions as Covid-19 cases rise throughout the continent.

French Prime Minister, Jean Castex, commented:

‘If over the next two weeks we see the indicators worsen, if intensive care beds fill up even more than we expect, we will indeed take additional measures. Nothing can be ruled out given what we’re seeing in our hospitals.’

As a result, the EUR/USD exchange rate has suffered as doubts grow over whether the Eurozone economy will be able to recover from a second-wave of the coronavirus.

In Eurozone economic data, today saw the release of the Eurozone’s ZEW Survey of Economic Sentiment in October fall unexpectedly from 73.9 to 52.3.

Today also saw Germany’s ZEW Survey of Economic Sentiment in October slide to 56.1.

ZEW President Achim Wambach commented:

‘The recent sharp rise in the number of COVID-19 cases has increased uncertainty about future economic development, as has the prospect of the UK leaving the EU without a trade deal.’

US Dollar (USD) Edges Higher as Safe-Haven Demand Rises as US Covid-19 Stimulus Hopes are Dashed

The US Dollar (USD) has continued to benefit from risk-off markets today after House of Congress Speaker Nancy Pelosi ruled out the Trump administration’s latest Covid-19 stimulus proposal, leaving global markets jittery as uncertainty grows over the world’s largest economy.

Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities, was more optimistic about American’s stimulus measures, however, saying:

‘It seems there is a strong optimism that eventually there will be stimulus. It is hard to argue against fiscal expansion given the coronavirus epidemic is almost like a natural disaster.’

In US economic data, today saw the release of the latest Consumer Price Index for September, which dipped from 0.4% to 0.2% in September.

Jennifer Lee, a senior economist at BMO Capital Markets, commented:

‘Although inflation did not brake heavily during this unique period, price increases started to ease six months in. Supply issues and higher input costs have added to pricing pressures, but elevated unemployment will hold back more significant gains.’

EUR/USD Forecast: Could Rising Covid-19 Cases Bolster Safe-Haven Demand for the US Dollar?

Euro (EUR) investors will be looking ahead to tomorrow’s speech from the European Central Bank’s (EBC) President Christine Lagarde. Any signs of dovishness about the Eurozone’s economy would prove EUR-negative.

Tomorrow will also see the release of August’s Eurozone Industrial Production figure, which looks set to paint a bleak picture for the bloc’s economic recovery. Consequently, we could see EUR suffer.

The US Dollar (USD) will remain sensitive to US political developments. Any further uncertainties could bolster safe-haven demand for the ‘Greenback’.

The EUR/USD exchange rate will likely remain subdued this was as the US Dollar is likely to benefit from its safe-haven status as global risk-sentiment suffers amid rising Covid-19 cases.