Recovering German Consumer Confidence Shores up Euro US Dollar Exchange Rate
A better-than-expected Germany GfK consumer confidence index helped to boost the Euro to US Dollar (EUR/USD) exchange rate.
While the index remained trapped in negative territory, only climbing from -15.5 to -12.9, the improvement nevertheless signalled an uptick in domestic sentiment.
Evidence that worries among German consumers began to ease on the month offered the Euro (EUR) a solid leg up against its rivals, in spite of lingering pandemic concerns.
February’s Eurozone economic sentiment index also bettered forecasts this morning, adding to the bullish outlook of EUR exchange rates.
Stronger levels of confidence across the currency union could help to shore up economic activity in the first quarter, limiting fears of a deeper contraction to come.
Euro Remains Vulnerable to Signs of European Central Bank Dovishness
Fresh commentary from European Central Bank (ECB) policymakers over the coming days could still put a dampener on the Euro, though.
As long as the central bank maintains a cautious outlook on the Eurozone economy the potential for further EUR exchange rate gains seems limited.
With monetary policy looking set to remain loose for longer the single currency may struggle to find any fresh momentum in the near term.
Another sharp annual slump in German import prices may also put pressure on the EUR/USD exchange rate on Friday.
Fresh signs of weakening trade conditions could leave the Euro on the back foot once again, with global trade looking set to remain muted for some months yet to come.
Forecasts of a negative French inflation rate may also drag the Euro to US Dollar exchange rate lower ahead of the weekend.
Signs of inflationary pressure across the currency union continuing to falter may give investors renewed incentive to sell out of the single currency.
US Dollar Muted in Spite of Forecast Uptick in Durable Goods Orders
Anticipation ahead of the release of January’s US durable goods orders data was not enough to keep the US Dollar (USD) from shedding ground, meanwhile.
Although markets expect to see a significant monthly uptick in orders, with forecasts pointing towards a 1.1% surge, USD exchange rates remained on the back foot.
If goods orders do pick up sharply for the start of 2021 this could encourage the US Dollar to recover some of its lost ground this afternoon.
Evidence of renewed confidence and demand within the domestic economy may encourage USD exchange rates to push higher across the board.
On the other hand, the latest week of initial jobless claims data could see the US Dollar remain under a degree of pressure.
As long as the labour market continues to show signs of weakening the potential for a USD exchange rate rally appears limited.
Fresh signs of rising job losses could see the Euro to US Dollar exchange rate extending its gains further ahead of the weekend.