The Euro (EUR) fell to session lows against the US Dollar (USD) on Tuesday afternoon after Federal Reserve Chair Janet Yellen told the US Congress that the world’s largest economy is continuing to improve, highlighting the diverging natures of the US and Eurozone economies.
Ms Yellen went on to say that the USA’s recovery is not yet complete and that considerable slack remains in the nation’s labour market.
The dovish comments saw the ‘Greenback’ weaken further against the buoyed Pound but offered little support to the already weakened Euro.
Yellen’s comments that interest rates could rise sooner than expected if the US labour market was to show stronger signs of improvement, however she also warned that if the economic recovery disappoints then rates will remain low for an extended period of time.
With recent economic data for the USA being mostly positive and the Eurozone’s data being mostly negative the two economies are clearly diverging.
Earlier in the session the Euro was weakened by yet another disappointing economic data release. The latest ZEW index, an opinion of investor sentiment, showed that sentiment fell to its lowest level since 2012 in Germany.
The ZEW Index declined by 2.7 points to 27.1 points. Economists had been calling for a rise to 28.0.
Sentiment in the wider Eurozone was also weaker than expected with the index climbing from 58.4 to 61.8, below expectations for a rise to 62.3.
Against the Canadian Dollar (CAD) the Euro ticked higher after the ‘Loonie’ was weakened by a decline in the price of Crude oil and as investors look ahead to Wednesday’s Bank of Canada interest rate decision. Policy makers are widely forecast to leave rates unchanged at 1%.
The Canadian Dollar is also under pressure after unexpectedly weak domestic employment data last week indicated that the country’s central bank will stick to its dovish stance on rates.
Wednesday sees the release of the latest Eurozone trade data. A worse-than-forecast set of data will likely weaken the single currency.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3575 ,
Euro,,British Pound,0.7912 ,
Euro,,Canadian Dollar,1.4590 ,
Euro,,Australian Dollar,1.4498 ,