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Euro US Dollar Exchange Rate Tests Best Levels All Month amid European Central Bank (ECB) Decision

Euro US Dollar Exchange Rate Strengthens despite ECB’s Cautious Tone 

Despite taking a cautious tone about the uncertainty of the Eurozone outlook, the European Central Bank (ECB) policy decision was well-received today and the Euro US Dollar (EUR/USD) exchange rate strengthened. 

Since opening at the level of 1.1983 this week, EUR/USD has trended with a largely upside bias as the Euro (EUR) benefits from US Dollar (USD) weakness. 

Earlier in the week, EUR/USD touched on a high of 1.2076. This was the pair’s best level in about a month and a half, and the pair has been trending closely to that high since. 

EUR/USD is slipping a little, trending in the region of 1.2016 at the time of writing as markets digest ECB news. Looking ahead to tomorrow, PMI projections could be highly influential. 

Euro (EUR) Exchange Rates Dip but Markets Remain Optimistic 

The Euro saw a mixed reaction to the European Central Bank’s (ECB) April policy decision today. The bank’s tone was overall dovish, with ECB President Christine Lagarde expressing concern about the uncertainty of the Eurozone’s recovery outlook. 

Lagarde said: 

‘The economies of the Eurozone have to go across the bridge of the pandemic, and have to be on solid and sustainable ground… to walk on a self-sustained basis.’ 

Despite the bank’s tone though, many analysts speculate that the bank will be pressured into taking a more hawkish stance once Eurozone data shows more signs of improvement. 

This speculation kept the Euro trending near its highs more easily. 

US Dollar (USD) Exchange Rates Steady after Days of Poor Performance 

Investors have been hesitant to sell the US Dollar too much more as it hits its worst levels in a month against the Euro. 

Demand for the US Dollar is mixed, being driven mostly by some lingering speculation that the Federal Reserve will eventually become more hawkish, as well as profit-taking as markets buy it from its cheap levels. 

Today’s news that US jobless claims had hit their lowest levels in a year also supported the US Dollar slightly. According to Andrew Stettner, Senior Fellow at The Century Foundation, concerns about the US job market persist: 

‘The problem isn’t that unemployed workers are not accepting jobs, but rather that the number of jobless people far outpaces the number of suitable job openings.’ 

Euro US Dollar (EUR/USD) Exchange Rate Awaits April PMIs Tomorrow 

Friday’s session will round out the week with Markit’s April PMI projections, with Eurozone and US prints all due for publication throughout the day. 

These stats will give investors a better idea of how the Eurozone and US economies are performing this month. 

If Eurozone PMIs beat forecasts, they could boost hopes that the Eurozone economic outlook is gaining momentum. This could keep the Euro higher into the end of the week. 

The US Dollar could also strengthen if US PMIs impress. However, US Dollar investors may be more likely to await next week’s slew of US data. 

With the Federal Reserve’s April policy decision and US growth rate data due next week, it is likely to be a highly influential week for the Euro US Dollar (EUR/USD) exchange rate outlook.