EUR/USD Exchange Rate Falls Despite Improving German Consumer Morale
The Euro US Dollar (EUR/USD) exchange rate fell today and is currently trading around $1.18.
The Euro (EUR) struggled against the ‘Greenback’ today because of growing concerns over the European Union’s (EU) third-wave Covid-19 crisis.
As a result, Eurozone markets are remaining cautious as a third-wave of the virus would seriously impede the bloc’s economic recover.
In Eurozone economic data, today saw the release of Germany’s latest GfK Consumer Confidence Survey for April, which fell to -6.2.
The figure was better-than-expected but the outlook for the Eurozone’s largest economy is uncertain as it faces the problem of rising Covid-19 cases.
GfK commented on the report:
‘Instead, the survey period was characterised by the initial easing of the hard lockdown and stable or even slightly declining infection figures. A very similar development was also observed in the spring of 2020, when the hard lockdown was also relaxed.
‘With infection rates rising again and the lockdown will be tightened again, it is questionable whether the improvement in consumer confidence will continue.’
Consequently, the Euro US Dollar (EUR/USD) exchange has suffered from dampened mood in the Eurozone economy’s ability to recover in the next few months.
US Dollar (USD) Edges Higher on Risk-Off Market Mood
The US Dollar (USD) rose against the single currency. But compared to other currencies it is relatively subdued owing to growing concerns over America’s unemployment crisis.
Today also saw the release of the latest US GDP figure for the final quarter of 2020, which beat forecasts and rose by 4.3%.
In other data, US Initial Jobless Claims fell too a better-than-expected 684,000.
JPMorgan economist Daniel Silver commented on the jobless figure:
‘The claims data can be noisy and we do not want to extrapolate too much signal from just one week of data, but overall it looks like the trend in initial claims has been moving down lately. This suggests that the labor market has been improving in recent months as the drag from COVID-19 has been reduced, in part due to vaccine distribution.’
However, growing US-China trade tensions have sparked demand for the safe-haven ‘Greenback’ today, thus buoying the US Dollar Euro (USD/EUR) exchange rate.
EUR/USD Exchange Rate Forecast: Could Rising US Consumer Sentiment Buoy Risk Sentiment?
US Dollar (USD) traders will be looking ahead to tomorrow’s release of the Michigan Consumer Sentiment Index for March.
Any improvement in the outlook for the US economy, however, could weaken demand for the safe-haven US Dollar.
The Euro (EUR) will continue to be driven by news of the European Union’s (EU) Covid-19 situation.
Any signs of rising Covid-19 infections throughout Europe would further weaken the EUR/USD exchange rate.