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Surprise Rebound in German Manufacturing Boosts Euro to US Dollar Exchange Rate from 2-Year-Worst

Euro to US Dollar Exchange Rate Climbs Back from Worst Levels on Latest Data

After days of floundering near lows, the Euro to US Dollar (EUR/USD) exchange rate is seeing stronger demand this morning. The Euro (EUR) is benefitting from the latest Eurozone data, while the US Dollar (USD) falls back after days of strong performance.

Since opening this week at the level of 1.0831, EUR/USD has been trending with a largely downside bias. EUR/USD briefly touched on a low of 1.0783 earlier in the week – the worst level for the pair since April 2017.

EUR/USD has struggled to recover much from those levels since. At the time of writing on Friday though, the Euro was benefitting from the latest German PMI data. If the pair continues to climb it could recover some of this week’s losses before markets close.

Euro investors will continue to look for signs of recovery in the Eurozone economic outlook, after today’s German manufacturing data boosted hopes that the slowdown had bottomed out.

Euro (EUR) Exchange Rates Climb as German Manufacturing Beats Forecasts.

For most of the week, the Euro trended near its worst levels. Investors were hesitant to buy the currency as Eurozone data continued to indicate that the bloc’s economy could still be in for an extended period of slowdown.

As a result of those concerns, today’s German PMI projections for February were slightly relieving. The data was overall a little worse than last month and services data fell short.

However, Germany’s key manufacturing PMI print was notably better than forecast. Expected to worsen from a contraction of 45.3 to 44.8, the figure instead lightened to 47.8.

This was the closest to the stagnant 50.0 point the manufacturing print had been for months. It helped overall composite PMI data to come in with a stronger than expected 51.1.

US Dollar (USD) Exchange Rates Resilient Near Highs despite Slowing Rally

The US Dollar has been surging for much of this week, due to a combination of both domestic and global factors.

US data has been fairly strong throughout the week and the Federal Reserve took a more optimistic than expected stance on growth in its latest meeting minutes report.

On top of this, a poor Japanese growth outlook combined with slightly softer fears around the spread of the coronavirus have meant that safe haven demand now favours the US Dollar over the Japanese Yen (JPY).

The US Dollar has been seeing strong performance all week, so its rally is softening slightly today after days of gaining. Some investors are selling the US currency from its best levels in profit-taking.

Overall though, the strong US outlook and safe haven mean the US Dollar is holding most of its strong performance.

Euro to US Dollar (EUR/USD) Exchange Rate Investors Await Key Growth Data

With Eurozone PMIs coming in higher than expected, the Euro finally has a little drive to push higher. Hopes that the Eurozone economy’s slowdown is coming to an end and that growth could improve this year continue to keep the Euro buoyed for now.

However, amid some concerns that the Eurozone’s growth could remain slow for an extended period of time, the Euro will remain sensitive to Eurozone data next week.

Key Eurozone growth data from Q4 2019 will be published throughout next week. Germany’s final Q4 growth will be published on Tuesday, with French growth data following on Friday.

Friday will also see the publication of February’s French and Eurozone inflation rate projections.

Other key stats due next week include German and French confidence figures, and US data due later in the week including durable goods orders and growth rate projections.

With the US Dollar still benefitting from safe haven demand, developments regarding the coronavirus will also influence the Euro to US Dollar (EUR/USD) exchange rate next week.