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Euro to US Dollar Exchange Rate Rebounds as Markets Digest Central Bank News

Euro to US Dollar Exchange Rate Rebounds despite Lack of Fresh Eurozone Support

The Euro (EUR) continues to be generally appealing, so the Euro to US Dollar (EUR/USD) exchange rate has been able to rebound from its worst levels. Demand for the US Dollar (USD) is mixed, as yesterday’s Federal Reserve news contained both optimism and dovishness.

EUR/USD has been seeing narrow volatile movement in recent weeks. Investors are hesitant to sell the Euro much, but the US Dollar has lacked the drive needed to sustain a strong recovery.

This week so far, EUR/USD opened the week at the level of 1.1846 and briefly trended higher, before falling after yesterday’s Federal Reserve news.

EUR/USD touched on a low of 1.1746 overnight. This was the worst level for the pair in a month, since the first half of August. The pair has since rebounded, but still trends lower in the region of 1.1800 at the time of writing.

Most of this week’s key data has been published already, leaving the Euro to US Dollar exchange rate to be driven by political and coronavirus developments until next week.

Euro (EUR) Exchange Rates Lack Drive as Markets Digest Central Bank Developments

The Euro remains appealing this week, despite a lack of notable news to influence the shared currency.

The shared currency has been driven more by movement in rival currencies, such as the US Dollar. A jump in US Dollar demand yesterday was the primary cause of EUR/USD losses overnight.

The market outlook for the Eurozone remains optimistic due to the bloc’s handling of the coronavirus pandemic.

However, this week’s Eurozone data has not notably influenced the Eurozone outlook. Today’s Eurozone inflation rate report was unsurprising, meeting projections of -0.2% year-on-year and -0.4% month-on-month.

US Dollar (USD) Exchange Rates Struggle to Sustain Rebound as Markets Digest Fed News

Yesterday saw the Federal Reserve hold its September policy decision.

The bank’s stances were met with mixed reaction. While the bank was optimistic about the US economic recovery so far, it also indicated that monetary policy would remain ultra-loose for some time to come.

The US Dollar saw a jump in demand last night in reaction to the decision. However since then, the US Dollar has been giving back its gains.

Expectations for low rates weighed on the US Dollar. On top of this, investors were disappointed with today’s US jobless claims results.

Euro to US Dollar (EUR/USD) Exchange Rate Looks to PMIs Next Week

Most of this week’s Eurozone and US data has been published already. This may mean that the Euro to US Dollar exchange rate is unlikely to see much more movement until next week.

Data due for publication tomorrow includes Eurozone current account and US Michigan confidence stats. However these figures are unlikely to cause big movement.

As a result, the Euro will likely keep being driven by rival movement through the end of the week.

The US Dollar could weaken again if US political or coronavirus uncertainties worsen. This may make it easier for EUR/USD to recover and trend nearer its best levels.

On the other hand, if the US Dollar finds any ground for another recovery attempt, the Euro to US Dollar (EUR/USD) exchange rate is more likely to end the week on a weaker note.