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Euro US Dollar Exchange Rate Sheds Last Week’s Gains amid US Dollar’s Broad Rebound

Euro US Dollar Exchange Rate Extends Yesterday’s Losses 

Rising US Treasury yields combined with fresh signs of strength in the US economic outlook are pushing the Euro US Dollar (EUR/USD) exchange rate lower today. The Euro (EUR) is struggling to capitalise on stronger Eurozone data due to strength in rivals. 

Last week saw EUR/USD surge from the level of 1.2047 to 1.2120 throughout the week overall, a gain of almost a cent. 

However, after touching a February high of 1.2181 yesterday, EUR/USD spent the afternoon tumbling. EUR/USD has been falling ever since, and at the time of writing on Wednesday had shed all of last week’s gains. 

The Euro is more likely to strengthen if data continues to impress, or if market optimism starts to weigh more on the safe haven US Dollar (USD) again. 

Euro (EUR) Exchange Rates Unable to Hold Against Stronger Rivals 

The Euro has found slightly stronger support from Eurozone data in recent sessions, as well as signs of improvement in the Eurozone’s coronavirus vaccine rollout. 

However, despite these factors the Euro’s appeal has been limited by strong demand for rival currencies. 

In particular, the Pound (GBP) and US Dollar (USD) have both been appealing this week. 

As the Euro and US Dollar have a negative correlation, strength in the US Dollar is the primary cause of Euro weakness today. 

Overall the Eurozone outlook is showing signs of calming though. The EU has secured more coronavirus vaccines and Italy’s new Prime Minister Mario Draghi has helped to soothe market anxiety about Italian political uncertainty. 

US Dollar (USD) Exchange Rates Continue Rebound Rally on Strong US Retail Stats 

The US Dollar rebounded from lows again yesterday, as surprisingly strong US manufacturing data from Empire led to a rise in US Treasury yields. 

Investors continued to pile into the US Dollar today. Bullishness around the US Dollar was strengthened by today’s key US retail sales results from January, which printed well above expectations. 

US retail sales surged 5.3% month-on-month. Analysts said that the rise in retail activity was likely due to the fiscal stimulus delivered earlier in the year. 

Euro US Dollar (EUR/USD) Exchange Rate Awaits Fed Minutes and More Key Data 

The Euro to US Dollar exchange rate’s movements have been volatile and sharp amid shifts in the US Dollar’s trade direction, and this could continue through the end of the week as well. 

This evening will see the publication of Federal Reserve meeting minutes. If the Fed minutes are more dovish than expected it could cause the US Dollar’s recent rebound to stop short. 

However, a less dovish report combined with continued strong US data in the coming days could knock EUR/USD even lower before the end of the week. 

US housing data is due tomorrow, but PMI projections on Friday will be even more influential. 

Friday will also see the publication of the Eurozone’s latest PMI projections. 

If they indicate that the Eurozone is weathering the coronavirus pandemic better than expected, this combined with optimistic coronavirus vaccine news in the Eurozone could help the Euro US Dollar (EUR/USD) exchange rate to mount a more sustained recovery.