Euro to US Dollar Exchange Rate Still on Track to See Gains This Week
While the Euro to US Dollar (EUR/USD) exchange rate has not been able to hold this week’s best levels, it is climbing again today. Market optimism around the EU’s handling of the coronavirus pandemic compared to US is keeping the pair buoyed.
Since opening this week at the level of 1.1291, EUR/USD has trended largely with an upside bias.
EUR/USD climbed in the middle of the week as Federal Reserve news hit the US Dollar (USD), and the pair touched on a high of 1.1411. This was the best level for the pair in over a year, sicnce March 2019.
While EUR/USD has since slipped from those highs, it only fell to near the week’s opening levels for a short time. At the time of writing, EUR/USD is trending higher once again, in the region of 1.1315.
Eurozone data has been a little better than expected. Meanwhile the US outlook continues to see both political and economic uncertainty. A brief profit-taking movement seen overnight was also short-lived.
Euro (EUR) Exchange Rates Remain Resilient after Profit-Taking Selloff
Overnight, the Euro briefly plunged from near its yearly highs. Investors bought its rival the US Dollar from its lows at the same time.
However, this movement was ultimately short-lived. The Euro remains appealing, due to hopes that the EU is handling the coronavirus pandemic better than some other major economies like the US and UK.
Eurozone production data published this morning has been, while concerning, better than forecast. This has also helped the Euro to avoid losses.
Euro area #IndustrialProduction -17.1% in April over March, -28.0% over April 2019 https://t.co/gDdhw2M6TN pic.twitter.com/RTX4wV0RE1
— EU_Eurostat (@EU_Eurostat) June 12, 2020
On top of this, the Euro is benefitting from continued weakness in its biggest rival, the US Dollar.
US Dollar (USD) Exchange Rates Lack Appeal amid US Uncertainty and Risk-Sentiment
Yesterday saw a brief rise in market demand for safe haven currencies. It came as investors reacted to a surprisingly dovish tone from the Federal Reserve on Wednesday.
The Fed forecast lasting contractions in the US economy, as well as indicating that the bank’s ultra-low monetary policy would remain until the end of 2022.
However, due to concerns about the US economy, other relatively safe currencies benefitted over the US Dollar. This included the Euro.
The US Dollar was eventually briefly boosted higher by profit-taking overnight. Investors bought currency back from its cheapest levels.
This movement was limited though. With hopes for economic rebounds in some major nations in the EU, EUR/USD is once again trending higher today.
Could Euro to US Dollar (EUR/USD) Exchange Rate Keep Climbing Past Highs?
While the Euro to US Dollar (EUR/USD) exchange rate has struggled to hold its best levels this week, a profit-taking movement was short-lived.
This indicates that investors are hesitant to buy the US Dollar much again without further reason. With the US economic outlook gloomy and the Federal Reserve likely to remain dovish for the time being, the US Dollar’s appeal is limited.
If other economies continue to show signs of recovering from the coronavirus pandemic, investors will be less willing to buy the US Dollar solely as a safe haven. However, even as a safe haven the Euro may remain more appealing.
Looking ahead, Eurozone and US data due next week could give investors a better idea of how the economies are performing amid the coronavirus pandemic.
In particular, German inflation and US retail sales and production on Tuesday could be highly influential for the Euro to US Dollar (EUR/USD) exchange rate.
