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Euro US Dollar Exchange Rate Steady, ‘Greenback’ Recovers as ECB Rate Cut Odds Rise

EUR/USD Exchange Rate Rangebound, Coronavirus Developments in Focus

The Euro US Dollar (EUR/USD) exchange rate held steady this morning, with the pairing fluctuating around $1.113.

The US Dollar (USD) recovered from its losses following the emergency US Federal Reserve rate cut earlier this week, with traders now looking to other major banks for stimulus signals amid growing coronavirus fears.

Analysts at Rabobank commented:

‘A rise in recessionary risks around the world is likely to support the JPY and the CHF, which are the established safe-haven currencies. That said, we also see the USD as remaining firm against a broad range of currencies on this scenario as investors attempt to avoid any risk of a liquidity crunch.’

Lee Hardman, a Currency Analyst at the Mitsubishi UFJ Financial Group (MUFG), also commented on political factors influencing the USD/EUR exchange rate:

‘The resurgence of [the Democrat’s candidate for the President of the United States] Joe Biden will help to dampen some of the downside risks for the U.S. Dollar given fears over a sharper shift to the left under Bernie Sanders have eased.’

US Dollar (USD) investors will be awaiting today’s publication of the US Nonfarm Productivity report for the fourth quarter. Any signs of improvement would boost USD as America’s economic outlook brightens.

EUR/USD Exchange Rate Steady, ECB Rate Cut Speculation Increases

The Euro (EUR) has remained subdued against its peers today as single currency investors continue to speculate over whether the European Central Bank (ECB) will cut its interest rates in the near-term.

Frederik Ducrozet, an analyst at Pictet Wealth Management, commented:

‘The late statement by ECB President Christine Lagarde provided the strongest signal to date that the central bank is about to shift its stance and ease monetary policy further as a response to the virus outbreak.’

The EUR/USD exchange rate is likely to remain volatile as markets continue to eye COVID-19 developments.

Any signs of escalation of the virus could push the German economy – the largest in with the Eurozone – towards a recession as slowing global trade negatively impacts the nation’s industrial sector.

Analysts at Danske Bank said in their statement:

‘With the spread of COVID-19 infections to Italy and thus the European continent, the coronavirus crisis has morphed from mainly a supply shock disrupting inputs to production especially from China, into a demand shock as Europeans stay home and postpone their travel plans.’

EUR/USD Outlook: German Factory Orders in Focus

Euro (EUR) investors will be looking ahead to tomorrow’s release of January’s German factory orders report. If the data confirms consensus and rises by 1.4% we could see the single currency rise as the Eurozone’s economic outlook improves.

US Dollar (USD) traders, meanwhile, will be keeping a close eye on tomorrow’s US Nonfarm Payrolls figure for February. Any signs of deterioration would prove USD-negative.

Tomorrow will also see the US Average Hourly Earnings report, which is expected to rise by 3%.

The EUR/USD exchange rate will continue to be driven by coronavirus developments this week. If the outbreak continues to spread, we could see the single currency suffer as traders become jittery over the Eurozone’s economic outlook going ahead.