Euro to US Dollar Exchange Rate Nears April Worst as Eurozone Confidence Remains Underwhelming
The Euro to US Dollar (EUR/USD) exchange rate may be in for another week of losses, as a combination of weak Eurozone data and higher market demand for safe haven currencies like the US Dollar (USD) leave the pair unappealing.
Despite holding its ground for much of last week, EUR/USD ultimately fell over half a cent from the level of 1.1313 to 1.1245 when Eurozone data revealed that the bloc’s economy had been suffering from slowdown for longer than hoped.
Due to those lasting concerns about the Eurozone’s weakening economy, and fresh disappointing Eurozone data, EUR/USD has continued to tumble this week as well.
At the time of writing on Wednesday afternoon, EUR/USD traded close to a low of 1.1188 – the worst level for the pair since the beginning of the month.
It indicated that much of the resilience the Euro (EUR) has seen this month, as well as the US Dollar’s brief bearish streak, may already have come to an end.
Euro (EUR) Exchange Rates Slide as French and German Business Confidence Weakens
At the end of last week, investors hoping for news that the Eurozone economy was seeing a rebound recovery from months of slowdown were disappointed.
The latest Eurozone PMI projections indicated that the bloc’s economy continued to perform worse than expected. Then, hopes that confidence had at least recovered and could help economic activity to improve overall were weighed by Tuesday’s disappointing Eurozone confidence projections.
As a result of market disappointment in these key figures, investors were especially hesitant to buy the Euro after this morning’s French and German business confidence figures fell short of expectations as well.
French business confidence unexpectedly fell to just 101, though the previous figure was revised slightly higher to 103.
Ifo’s April German business confidence stats fell short of forecasts in every notable print. The business climate fell to 99.2, current conditions to 103.3 and expectations to just 95.2.
US Dollar (USD) Exchange Rates Supported by Safe Haven Demand and US Housing Data
The Eurozone data only put further pressure on the Euro and made investors more eager to buy safe haven currencies like the US Dollar instead.
Safe haven currencies, like the US Dollar, are currencies which benefit in times of market uncertainty. As a result, investors found the US Dollar more appealing amid this week’s fresh US trade tensions, as well as signs that the global economic slowdown is still biting.
Earlier in the week, the US government announced that it would end waivers on trade sanctions on major nations like India, and existing trade-tensions between the US and EU have flared up again as well.
As the US Dollar is the Euro’s biggest rival, it has also benefitted from this week’s Euro weakness.
On top of all that, the US Dollar is still more appealing due to signs that the US economic outlook is relatively resilient compared to other major economies.
Euro to US Dollar (EUR/USD) Exchange Rate Investors Highly Anticipate US Growth Report
The Euro to US Dollar (EUR/USD) exchange rate is likely to keep trending lower for the rest of the week amid a lack of upside potential in the Euro or upcoming Eurozone data.
However, the pair could still be in for some surprise gains if upcoming US data has a negative impact on the US economic outlook.
This week’s most influential US data is still due to be published, with March’s durable goods orders due tomorrow and the key Q1 Gross Domestic Product (GDP) growth rate projection due on Friday.
US growth is likely to be particularly influential if it surprises investors. Analysts currently expect growth to have slowed just slightly quarter-on-quarter, but if it falls short of expectations then EUR/USD could see a little late-week recovery.
Still, the Euro’s potential for gains is likely to be limited either way due to a lack of supportive news or data.
If Friday’s French consumer confidence or jobseekers figures are surprisingly strong though, the Euro to US Dollar (EUR/USD) exchange rate could see a late-week recovery for that reason instead.