The Euro US Dollar (EUR/USD) exchange rate has weakened today as a strengthening US Dollar limits the appeal of the Euro.
At the time of writing the EUR/USD exchange rate is trending around the $1.1904 level as a slew of positive economic data from the Eurozone is not enough to bolster the single currency.
Euro (EUR) Weakens Despite Positive Economic Data
The Euro has weakened against the US Dollar today as a range of positive economic data could do little to support the single currency.
Despite the Eurozone economic sentiment indicator rising 3.4 points during June, just 0.3 points from the all-time high seen in 2000, the Euro still struggled against many of its major rivals.
Analysts at ING commented on the indicator saying:
‘The reopening of services has given a big boost to the Eurozone economy in the second quarter. The mood among consumers and businesses is exuberant, which translates to better expectations for consumption and investment. The question is what could hold back a strong recovery, and for the moment the biggest risks seem to be supply related.’
As the US Dollar strengthened, the negative correlation between the pairing meant the Euro lacked appeal to investors.
US Dollar (USD) Supported by Risk-Off Trade
The US Dollar (USD) has seen itself supported throughout the day as a risk-off mood limits the appeal of risk-correlated currencies and drives up demand for the safe-haven ‘Greenback.’
US Dollar investors are awaiting the latest ADP employment change figures from the US which are to be released tomorrow which make the US Dollar even more appealing to investors.
Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto commented on the upcoming employment change figures:
‘The potential for an upside surprise (in the U.S. jobs data) that pulls monetary tapering and tightening expectations forward is looming ever bigger for investors. A number significantly above the 700,000 mark could really get the dollar freight train running, and no one wants to be tied to the tracks if that happens.’
Euro US Dollar Exchange Rate Outlook: US Employment Change in Focus
For US Dollar investors, tomorrow’s ADP US employment change figures could bolster the US Dollar higher as it’s expected the data will show 600k jobs added to the US economy during June.
Euro traders will be focusing on flash inflation rate data from the Eurozone tomorrow along with employment change figures from the bloc’s largest economy, Germany.
The EUR/USD exchange rate will continue to be driven by any further coronavirus developments in the coming days, as the delta variant of the virus spreads globally the global market mood could sour more, supporting the US Dollar.