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Euro to US Dollar Exchange Rate Holds Near Weekly Best as US-China Trade Hopes Weigh on USD

Euro to US Dollar Exchange Rate Higher Despite Lack of Strong Eurozone Data

The Euro to US Dollar (EUR/USD) exchange rate has been climbing this week so far, as hopes for progress in US-China trade negotiations weigh on safe haven demand and keep the US Dollar’s (USD) strength limited.

Since opening this week at the level of 1.1295, EUR/USD has been trending with an upside bias and yesterday the pair gained over a third of a cent. At the time of writing, EUR/USD was trending near its best level in over a week – 1.1354.

While the biggest cause of EUR/USD movement so far has been US-China trade hopes making the US Dollar less appealing, the pair’s gains have been limited too.

A lack of impressive Eurozone data so far this week, combined with market anticipation for this evening’s upcoming Federal Reserve meeting minutes, made investors hesitant to buy EUR/USD too much.

Euro (EUR) Exchange Rates Fail to Extend Gains amid Lack of Drive

The Euro’s (EUR) movement this week so far has been more due to weakness in the US Dollar. As the Euro and US Dollar share a negative correlation, the Euro often gains in times of US Dollar weakness.

However, looking at Eurozone data alone there has been little reason for investors to buy the shared currency. This is weighing on the Euro’s potential for gains.

Yesterday, ZEW published its February economic sentiment stats for Germany and the Eurozone.

The stats were mixed, with German current conditions falling short but economic sentiment figures contracting less than expected in both Germany and the Eurozone.

These stats gave investors little reason to be excited, and the Eurozone’s December current account and construction output stats were disappointing as well.

This morning, as investors anticipated Eurozone consumer confidence stats and Federal Reserve news, the Euro found a little support as German PPI stats from January beat forecasts.

US Dollar (USD) Exchange Rates Slide as US-China Trade Hopes Rise

The US Dollar’s movement has been mixed this week, with US data relatively low-influence and the currency unappealing as investors become more willing to take risks instead of hold on to safe havens.

The US Dollar is a safe haven currency that typically benefits in times of market uncertainty.

However, as US-China trade negotiations are perceived as going well, investors are becoming more hopeful that a deal between the nations can be met. This is making markets more willing to take risks, too, limiting demand for the safe haven US Dollar.

US-China trade negotiations continued this week, and with both nations optimistic about talks markets are hopeful that some kind of deal can be reached – even if it means delaying the deadline for talks.

Still, investors are hesitant to sell the US Dollar that much either. On Wednesday morning, the US currency steadied as investors anticipated the evening’s key Federal Reserve meeting minutes report.

Euro to US Dollar (EUR/USD) Exchange Rate Investors Anticipate Federal Reserve Minutes

As well as Eurozone consumer confidence projections for February today, Euro to US Dollar (EUR/USD) exchange rate investors are anticipating the Federal Reserve’s latest meeting minutes report – due out this evening.

The Federal Reserve took a more cautious shift in tone in its most recent policy decision, and despite some signs of continued strength in the US economy there have also been some underwhelming stats in recent weeks.

If the Fed’s latest meeting minutes show more caution about slowing global growth and the US economy than expected, the Euro to US Dollar exchange rate could be in for further gains.

However, any signs that the Fed is still planning to hike US interest rates at least once more this year would leave the US Dollar more appealing and push EUR/USD lower.

Euro investors, on the other hand, are highly anticipating upcoming key data from Germany and the Eurozone overall.

Thursday will see the publication of Germany’s final January inflation rate results, as well as Markit’s February PMI projections for the Eurozone. German growth results for Q4 and the Eurozone’s overall January inflation stats will come in on Friday.

As concerns about Germany’s slower than expected economic activity have been a major cause of Euro weakness lately, surprising German data could be highly influential to the Euro to US Dollar (EUR/USD) exchange rate.