EUR/USD Exchange Rate Steady as US Markets Await News on Stimulus
The Euro to US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently fluctuating around $1.19.
US markets are awaiting the final verdict from the US House on President Joe Biden’s whopping $1.9 trillion stimulus package.
As a result, the USD/EUR exchange rate has held steady, with global markets remaining cautious as the stimulus plan arrives at its final critical stage.
OECD Chief Economist Laurence Boone commented:
‘This will not only boost the U.S. economy, but it will fuel global growth through increased demand in the U.S. and from the U.S. to the rest of the world.’
Consequently, demand for the safe-haven US Dollar is being compromised by growing confidence in the outlook for the world’s largest economy.
In US economic data today saw the release of the latest inflation figure for February, which rose by just 0.1%.
Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said:
‘[Core inflation] is being buffeted around in an erratic fashion by the pandemic, causing strange movements in prices for a number of categories in any given month.’
Euro (EUR) Struggles as Outlook for Eurozone Economy Darkens on Weak GDP Data
The Euro (EUR) struggled to rise against the US Dollar (USD) today despite stronger-than-expected French Industrial Output in January.
Nonetheless, with Germany facing an extended lockdown until later this month, EUR traders are becoming more concerned about the outlook for the Eurozone’s economy. Germany is the bloc’s economic powerhouse.
Yesterday also saw the release of the Eurozone’s GDP data for the fourth quarter of last year. The figure undershot forecasts on a quarterly basis, falling by -0.7%.
Consequently, EUR traders are concerned that the Eurozone could be heading toward a double-dip recession.
Analysts at Reuters said:
‘The Eurozone economy contracted more than previously estimated in the last three months of 2020 against the previous quarter, revised data showed on Tuesday, as household consumption plunged because of COVID-19 lockdowns.’
EUR/USD Forecast: Could US Stimulus Weaken Demand for the ‘Greenback’?
Euro (EUR) investors will be awaiting tomorrow’s interest rate decision from the European Central Bank (ECB).
Although the rate is expected to remain at 0%, any dovish comments about the Eurozone’s economy would be EUR-negative.
In US economic data, tomorrow will see the release of the latest Initial Jobless Claims for Marcy. Any signs of rising unemployment would be USD-negative.
The EUR/USD exchange rate will largely be driven by global risk sentiment. If the US successfully passes its stimulus plan, then demand for the safe-haven USD will suffer.