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Euro to US Dollar (EUR/USD) Exchange Rate Falls as Eurozone Faces Uncertainty as Covid-19 Cases Rise

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EUR/USD Exchange Rate Sinks as Europe Faces Christmas Lockdowns

The Euro to US Dollar (EUR/USD) exchange rate fell by -0.3% today, with the pairing currently trading around $1.22.

The Euro (EUR) struggled today following the release of the flash Eurozone Consumer Confidence data, which fell by -13.9.

As a result, EUR traders are becoming concerned for the Eurozone’s economy as several key economies in the bloc – included the largest, Germany – have re-entered national lockdowns.

Meanwhile, the DIW institute has predicted that the Germany economy could shrink by -1% in the fourth quarter, topping the first quarter’s downturn.

Claus Michelsen, a forester at the institute, said:

‘The German economy can only return to a recovery path if the situation substantially calms down. Even if it’s painful, we’ll have to endure the hard lockdown until at least the end of January.’

Any further signs of Europe’s Covid-19 situation worsening ahead of Christmas would also drag down the EUR/USD exchange rate.

US Dollar (USD) Heads Higher as Safe-Haven Demand Rises on Covid-19 Uncertainty

The US Dollar (USD) has benefited from demand for the safe-haven ‘Greenback’ today as uncertainty over the global economy continues to grow.

Added uncertainty over the UK’s Brexit situation has also provided USD with a boost as risk sentiment deteriorates.

In US economic news, today saw the release of the Chicago Fed National Activity Index for November, which fell from 1.01 to 0.27.

The Chicago’s Fed report suggested that this was slower but slightly above-average growth for the month of November.

However, the outlook for the American economy remains largely uncertain, with Covid-19 rates rising and concerns over Europe’s cases of a mutated strain of the virus.

Growing speculation over the new US stimulus package, which would give a boost to independent businesses and healthcare.

Analysts at Reuters said of the US stimulus package:

‘The package would give $600 direct payments to individuals and boost unemployment payments by $300 a week. It also includes billions for small businesses, food assistance, vaccine distribution, transit and healthcare. It extends a moratorium on foreclosures and provides $25 billion in rental aid.’

Any further announcement of a US stimulus package could clip some of the USD’s gains.

EUR/USD Forecast: Could Falling German Consumer Confidence Drag Down the Single Currency?

Euro (EUR) traders will be awaiting tomorrow’s release of January’s German Consumer Confidence Survey.

Any significant downturn in the outlook for Germany’s economy could drag down the single currency further.

US Dollar (USD) investors will be eyeing tomorrow’s release of the annualised GDP data for the US third quarter.

However, the EUR/USD exchange rate is likely to remain subdued as demand for the safe-haven ‘Greenback’ increase on growing uncertainty over the coronavirus pandemic.