EUR/USD Exchange Rate Falls as Risk Sentiment Dips on Fading US Stimulus Hopes
The Euro to US Dollar (EUR/USD) exchange rate dipped today, with the pairing currently trading around $1.183.
The US Dollar (USD) rose today on thinning hopes that the US will secure fiscal stimulus ahead of November’s Presidential Election.
Esther Reichelt, an analyst at Commerzbank, commented:
‘The U.S. Presidential elections are only 12 days away, before that nobody wants to commit too much to a particular direction in Euro/Dollar.’
Consequently, risk-sentiment has dampened and provided a boost to safe-haven currencies such as the US Dollar.
In US economic news, today saw the release of the latest October Initial Jobless Claims report, which fell to a better-than-expected 787 thousand.
As a result, this provided some upbeat news for the US economy, which appears to be recovering slowly from the worst of the first wave of the Covid-19 crisis.
Joseph Trevisani, an analyst at FXStreet, was less optimistic, however, saying:
‘Even though the exceedingly slow improvement and occasional reversals in claims have been the major disappointment of the recovery, they have not altered the general view that the economy is getting better.’
Euro (EUR) Dips as Concerns Grow for the Eurozone’s Economy
The Euro (EUR) failed to gain against the ‘Greenback’ today owing to growing concern over Europe’s rising coronavirus cases, which continue to derail the Eurozone’s economic recovery.
As a result, EUR investors are remaining cautious as there is still no light at the end of the tunnel for the Eurozone’s economy, unlike the larger economy China, which has recently shown signs of recovery.
In Eurozone economic news, today saw the flash Consumer Confidence figure plummet below forecasts from -13.9 to -15.5.
Bert Colijn, the Senior Economist for the Eurozone at ING, commented on the report:
‘As new measures are being introduced at a fast pace at the moment, risks to the outlook are increasing rapidly at the moment. A double-dip has become a realistic scenario for the fourth quarter and the dip in consumer confidence only adds to those concerns.’
The European Central Bank (ECB) has also hinted that the Eurozone’s economy is in for a bumpy road ahead, with Christine Lagarde – the central bank’s President – warning about the affects of a second wave of Covid-19 on the economy.
EUR/USD Forecast: Could US Political Uncertainty Further Boost the ‘Greenback’?
US Dollar (USD) investors will be monitoring the aftermath of the latest Presidential debate between US President Donald Trump and his Democratic competitor, Joe Biden.
Any further political uncertainties ahead of November’s elections could weigh on risk sentiment and boost demand for the safe haven ‘Greenback’.
Euro (EUR) traders will be keeping a close eye on tomorrow’s release of October’s Eurozone Composite PMI.
If the Eurozone continues to struggle amid the Covid-19 pandemic, then we could see the EUR/USD exchange rate continue to fall.