EUR/USD Exchange Rate Edges Higher Despite Worsening Covid-19 Situation in Europe
The Euro to US Dollar (EUR/USD) exchange rate rose today, with the pairing currently up by 0.3% and trading around $1.181.
Despite rising concerns over Europe’s Covid-19 situation, with Italy now expected to enter a nationwide lockdown to curb the spread of the virus, the EUR/USD exchange rate headed higher today.
Pierre Veyret, an analyst at ActivTrades, commented on the Eurozone’s economic predicament:
‘The worsening virus situation in many hotspots is weighing on market sentiment as it sparks fears of tougher containment measures that could bring further economic damage.
‘While a bearish correction after the rally over the past few days would be logical and even healthy, fears of a W-shaped recovery are occupying more and more space in investors‘ minds.’
Nevertheless, the Euro has benefited from broader weakness in the US Dollar – the single currency’s biggest competitor – as hopes of a Covid-19 vaccine in the near-term has limited appeal for the safe-haven ‘Greenback’.
That said, the EUR/USD exchange rate is likely to remain volatile, with Europe’s coronavirus situation causing some concern as it threatens to further damage the Eurozone’s already delicate economy.
US Dollar (USD) Sinks as Risk-On Market Mood Weighs on ‘Greenback’
The US Dollar has suffered from risk-on markets today, with investors becoming more optimistic that we could see a worldwide roll out of Pfizer’s 90% effective Covid-19 vaccine.
In US economic news, today saw the release of October’s Continuing Jobless Claims which beat forecasts and dipped to 6.786 million.
Last week saw over 1 million Americans claim unemployment, which was down slightly from the week prior.
As a result, USE traders are feeling a little more optimistic about America’s economic recovery in the months ahead.
Nevertheless, US political uncertainties continue despite Democrat Joe Biden’s winning of the US election and becoming the new President-elect.
US President Donald Trump has failed to concede to Biden’s victory, leaving markets uncertain as to what could happen next as Trump attempts to challenge the vote.
Any further political volatility over the next few days could restore safe-haven demand for the US Dollar.
EUR/USD Forecast: Eurozone GDP Data in Focus
Euro (EUR) traders will be awaiting tomorrow’s release of the Eurozone’s Q3 GDP data.
Any improvement in the Eurozone’s economic outlook could bolster the EUR/USD exchange rate.
USD investors will be awaiting tomorrow’s release of the latest US Michigan Consumer Sentiment Index for November.
If this shows a deterioration in the outlook for America’s economy, then we could see the EUR/USD exchange rate fall as demand rises for the safe-haven ‘Greenback’.
Meanwhile, EUR investors will be monitoring Europe’s Covid-19 situation. If this worsens, then we could see the single currency fall.