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Euro to US Dollar Exchange Rate Sheds Weekly Best as German Recession Fears Climb


Euro to US Dollar Exchange Rate Benefits from Risk-Sentiment but Fails to Advance

While the Euro to US Dollar (EUR/USD) exchange rate is on track to sustain gains this week, the pair has been unable to sustain its best levels and a late-week shift may still be possible depending on upcoming US Non-Farm Payroll data.

Since opening this week at the level of 1.0990, EUR/USD briefly tumbled to a two-year-worst of 1.0923 before recovering.

EUR/USD was unable to hold yesterday’s one-week-high of 1.1078 and trended closer to the level of 1.1040 at the time of writing this morning.

The Euro (EUR) is avoiding notable losses today despite German recession fears, due to US-China trade hopes weighing on the US Dollar (USD).

Euro (EUR) Exchange Rates Pressured by Fresh German Recession Fears

The Euro climbed against the US Dollar from Tuesday through yesterday, but its advances stopped following the publication of some solid US data last night.

Since then, the Euro’s strength has been weighed by Eurozone economic concerns. This morning’s German industrial production results from July only worsened the economic outlook, as the data unexpectedly contracted.

German industrial production was expected to recover at around 0.3%, but while the previous figure was revised higher to -1.1% the new figure contracted at -0.6%.

It marked the sixth month out of the past year that Germany’s factory sector had shrunk, and worsened fears that Germany’s economy could see recession soon.

According to Andrew Kenningham, Chief Europe Economist at Capital Economics, more weakness may still be ahead too:

‘There is still no sign in the latest surveys that the manufacturing recession is bottoming out.’

US Dollar (USD) Exchange Rates Find Support in US Data Ahead of Key Job Market Report

Earlier this week, news that the US manufacturing sector was unexpectedly contracting combined with fresh US-China trade hopes left the US Dollar less appealing.

News that the US and China would return to formal negotiations within the next month bolstered market risk-sentiment. As the US Dollar’s riskier and trade-correlated rivals strengthened, the US Dollar weakened.

However, on Thursday the US Dollar found a little fresh support as the latest non-manufacturing PMI and factory orders data beat forecasts.

The data supported hopes that the US economy was resilient amid concerns of the impact of the US-China trade war.

Still, the US Dollar’s gains were limited as US-China trade hopes continued to benefit its rivals, and investors were hesitant to move too much on the currency ahead of upcoming US Non-Farm Payroll data.

Euro to US Dollar (EUR/USD) Exchange Rate Investors Await US Non-Farm Payrolls

The Euro to US Dollar (EUR/USD) exchange rate is on track to end this week higher, but if upcoming key US data impresses investors that could still change.

August’s major US Non-Farm Payroll report will be published this afternoon, and is expected to show that the number of new jobs slowed last month. Wage growth is expected to have slowed slightly as well.

If the data comes in even slower than forecast, Federal Reserve interest rate cut bets could rise and EUR/USD would rise.

On the other hand though, unexpectedly strong US job market data could see EUR/USD knocked back down, which could leave it closer to its worst levels in two years.

Demand for the Euro will be driven by US Dollar strength, as well as Eurozone growth fears. Anticipation for next week’s European Central Bank (ECB) policy decision may keep the Euro to US Dollar (EUR/USD) exchange rate from falling too far though.