EUR/USD Exchange Rate Sinks as Covid-19 Fears Boosts Safe-Haven Demand
The Euro US Dollar (EUR/USD) exchange rate plummeted by -1.4% today as the ‘Greenback’ surges as investors seek-out the safe-haven currency amid rising coronavirus fears. The pairing is currently fluctuating around $1.098.
The US Dollar (USD) soared against many of its peers today as markets seek out its safe-haven as the global coronavirus pandemic stresses currently more vulnerable economies like the Eurozone.
Analysts and Reuters commented:
‘The Federal Reserve on Sunday slashed rates to zero and launched a new bond purchase program. Other central banks have taken similar measures but the moves have so far failed to stem liquidity strains and market panic.’
‘Central banks have also cut pricing on their swap lines to make it easier to provide dollars to financial institutions around the world.’
In US economic news, today saw February’s US industrial production report beat forecasts and rise by 0.6%. This provided some uplift for the USD as the American economy shows relative signs of strength against some of its struggling competitors.
Euro (EUR) Exchange Rate Drops on Eurozone Recession Fears
The Euro (EUR) struggled against the US Dollar (USD) today as the Eurozone’s economic outlook continues to darken as Italy and France are now under lock down to contain the spread of Covid-19.
As a result, single currency traders are becoming increasingly pessimistic over the growing prospect of a recession for the bloc.
Today also saw the publication of the German ZEW Survey of economic sentiment, which plummeted to a worse-than-expected -49.5 in March. With the German economy being the largest in the Eurozone, this also added to recession fears.
ZEW President Achim Wambach was downbeat in his analysis, saying that the German economy was now on ‘red alert’.
‘The financial market experts currently expect to see a decline in real gross domestic product in the first quarter, while also considering a further drop in the second quarter to be very likely. For the whole of 2020, the majority of experts currently expect a decline in real GDP growth of approximately one percentage point as a result of the corona pandemic.’
EUR/USD Outlook: Covid-19 Developments in Focus
Euro (EUR) investors will be awaiting tomorrow’s release of the Eurozone’s inflation data for February. Any signs of improvement could provide some uplift for the single currency.
Covid-19 developments continue to drive markets this week. As a result, the EUR/USD exchange rate is likely to remain subdued as the odds of a recession for the Eurozone continue to grow.
The US Dollar (USD) is likely to hold onto today gains into Wednesday as investors continue to flock to the safe-haven ‘Greenback’.