EUR/USD Exchange Rate Falls on Dimming Outlook for Eurozone Economy
The Euro to US Dollar exchange rate dipped today, with the pairing currently fluctuating around $1.20.
The Euro continued to fall against a stronger USD today as the European Union’s (EU) relatively slow Covid-19 vaccine rollout has caused concern for the Eurozone economy.
In Eurozone economic data, today saw the release of Germany’s Manufacturing PMI for February. The figure beat forecasts and rose to 60.7.
Phil Smith, the Associate Economics Director at IHS Markit, commented on the data:
‘German manufacturing saw strong growth in February on the back of an increasingly positive trend in export orders. Capital goods producers noted a particularly strong performance, in a sign of increasing investment spending.’
However, EUR investors are remaining cautious as the outlook remains relatively uncertain due to the slow rollout of Covid-19 vaccines throughout Europe.
US Dollar (USD) Exchange Rate Edges Higher as US Stimulus Package Edges Closer to Success
The US Dollar edged higher against the single currency despite President Joe Biden’s $1.9 trillion stimulus package successfully passing through the House of Representatives.
As a result, risk sentiment has improved as the outlook for the world’s largest economy continues to improve.
In US economic data, today saw the release of the ISM Manufacturing PMI for February, which beat forecasts and rose by 60.8.
James Knightley, the Chief International Economist at ING, commented on the data:
‘With manufacturing and construction activity surging ahead and inflation pressures becoming more evident the Federal Reserve’s relaxed attitude to allowing the economy to run hot is going to be increasingly questioned.’
Consequently, USD has risen on growing confidence in the US economy.
Added to this, concerns over the Brazilian variant – found in the UK – has also increased demand for the safe-haven currency.
EUR/USD Forecast: Could Improving Risk Sentiment Drag Down the US Dollar?
Euro traders will be awaiting tomorrow’s release of Germany’s latest Retail Sales report for January.
Any improvement in the outlook for the Eurozone’s largest economy would be EUR-positive.
Tomorrow will also see the release of January’s German Unemployment Rate report. If this rises, then we could see the single currency suffer.
Meanwhile, the EUR/USD exchange rate will continue to be driven by global risk sentiment.
If the outlook for the world’s largest economy improves, however, then we could see demand for the safe-haven ‘Greenback’ begin to fall.