EUR/USD Exchange Rate Rangebound as Concerns Grow for Eurozone’s Economy
The Euro to US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.184.
The Euro (EUR) held steady today after the European Central Bank’s (ECB) President Christine Lagarde announced said that the Covid-19 vaccine was ‘no game changer’ for the bank’s stimulus plans.
‘Before we had the news about a vaccine, we had negative news about the second wave and containment measures that affected one country after another.’
However, with Europe’s coronavirus remaining largely uncertain and numbers showing a concerning growth over the past few days, EUR investors are remaining cautious.
Nevertheless, we could see the Euro (EUR) edge higher over the course of this week as the safe-haven US Dollar – the single currency’s largest competitor – has weakened following the announcement of Covid-19 vaccines.
In Eurozone economic news, today saw the release of the latest Construction Output for September, which fell by -2.9% month-on-month.
US Dollar (USD) Compromised by Covid-19 Vaccine Hopes
The US Dollar (USD) has been compromised by hopes of a worldwide roll out of Covid-19 vaccines in the next few months.
As a result, demand for the safe haven ‘Greenback’ has slipped in favour of riskier currencies.
Added to this, reports that a vaccine roll out could see the ‘Greenback’ fall by a whopping 20% have also weigh on US markets today.
In US economic news, today saw the release of the latest US jobs figures, with Initial Jobless Claims for Novembers rising to a worse-than-expected 742 thousand.
Daniel Zhao, a senior economist at Glassdoor Senior Economist, commented on the data:
‘Initial unemployment insurance (UI) claims rose, maintaining unhealthy levels at a time when COVID-19 cases are reaching alarming rates around the country.
‘Continuing claims dropped below their pre-pandemic record set during the Great Recession, but it’s mostly driven by benefit exhaustion for 9 million claimants.’
EUR/USD Outlook: Could Euro Head Higher as Demand for US Dollar Slips on Covid-19 Vaccine Hopes?
Euro (EUR) traders will be awaiting another speech from the ECB’s Christine Lagarde tomorrow. Again, any downbeat comments about the Eurozone’s economy would prove EUR-negative.
Tomorrow will also see a speech from Germany’s Deutsche Bundesbank President Dr Jens Weidman.
If the outlook for Germany’s economy, which is the largest in the Eurozone, looks bleak, then the EUR/USD exchange rate would fall.
The US Dollar (USD) will remain sensitive to global risk sentiment. Any further signs of an imminent roll out of Covid-19 vaccines would clip demand for the ‘Greenback’.
The EUR/USD exchange rate could also head higher owing to the Euro’s negative correlation with the US Dollar.