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Euro to US Dollar Exchange Rate Nearer Quarterly Best after Impressive May Rally

Euro to US Dollar Exchange Rate Avoids Losses but Euro Rally Slows 

Following weeks of impressive gains, the Euro to US Dollar (EUR/USD) exchange rate has been able to hold its ground this week so far. Still, even though the US Dollar (USD) remains unappealing, the Euro’s (EUR) bullishness may be running out of steam. 

After opening last week at the level of 1.1105, EUR/USD made impressive gains of almost two cents. At the pair’s best levels of the week, it touched highs of 1.1376 not seen since March. 

Ultimately, EUR/USD closed the week at the level 1.1290 and has been able to hold its ground since then. 

With key Eurozone and US data due in the coming days, as well as Federal Reserve news, there is much on the horizon for Euro to US Dollar exchange rate investors. 

Euro (EUR) Exchange Rates Benefitting from Improving Global Outlook 

The Euro has been rallying impressively over the past few weeks. Amid weakness in its biggest rival, the US Dollar, the Euro has been even more appealing. 

However, the Euro is not typically correlated with market risk-sentiment. Amid hopes for an economic rebound from the coronavirus pandemic, investors have been more willing to take risks as well. 

As a result, risk-correlated currencies have taken some of the focus in recent sessions and the Euro’s rally has slowed somewhat. 

Still, the Euro’s outlook is still fairly strong which is helping the shared currency to hold its ground after weeks of gains. According to Analysts art Nordea: 

‘More money printing is a short-term positive for the EUR as it glues together the EUR-construction (again). We see a scope for a move towards 1.17-1.20 once we get closer to the signing of the ‘Next Generation EU’ debt deal, but that is a story for H2-2020.’ 

US Dollar (USD) Exchange Rates Pressured by Improving Market Outlook 

As hopes rise for recovery from the coronavirus pandemic, safe havens like the US Dollar continue to shed their appeal. 

Even as the rallies of some US Dollar rivals run out of steam, the US Dollar remains unappealing due to this risk-on environment. 

Many analysts believe the US Dollar’s current weakness will last. Expectations of further weakness in the US currency mean investors have little reason to buy it back much from recent losses. 

According to Analysts at ING: 

‘we are not looking for the Fed to dent the risk rally. Instead then we look for this benign investment environment to continue, which could see investors return funds to emerging markets and the dollar stay under pressure.’ 

Euro to US Dollar (EUR/USD) Exchange Rate Investors to Closely Watch Coronavirus Developments 

If major economies continue to indicate that they are planning exits and normalising from coronavirus quarantines and lockdowns, the safe haven US Dollar is unlikely to see much fresh strength. 

The US Dollar is expected to remain under pressure so long as the global outlook continues to improve. What’s more, a weaker US Dollar typically benefits the Euro. 

As a result, even if the Euro’s rally slows further, there is a solid chance it will remain appealing and strong overall. 

The Euro’s appeal may be bolstered even further if investors are impressed with upcoming Eurozone data, or EU normalcy plans. 

Eurozone employment change and growth results will be published tomorrow. US wholesale inventories data is also due for publication. 

Of course, Euro to US Dollar (EUR/USD) exchange rate investors are also anticipating Wednesday’s Federal Reserve policy decision and press conference.