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Euro US Dollar Exchange Rate Sheds Gains in Risk-on Market

Euro to US Dollar (EUR/USD) Exchange Rate Tumbles amid Eurozone’s Economic Slowdown

Despite mixed US data and Federal Reserve interest rate cut bets, the Euro to US Dollar (EUR/USD) exchange rate tumbled this week as the US Dollar (USD) benefited from rising hopes for improving trade relations between the US and China.

Following last week’s gain from 1.1080 to 1.1165, EUR/USD has shed all those gains this week and then some.

Overnight, EUR/USD touched on a low of 1.1038, its worst level in three weeks. At the time of writing on Friday, EUR/USD is trending near the level of 1.1045, leaving it over a cent below the week’s opening levels.

The primary cause for losses has been US-China trade hopes boosting the US Dollar, but the Euro’s (EUR) appeal has been weaker as well amid a gloomy economic outlook for the Eurozone.

Euro (EUR) Unappealing on Murky EU Economic Outlook

The Euro (EUR) has lacked solid support this week, as domestic economic data was mixed and economists continued to predict a period of extended weak growth for the Eurozone, and a likely German recession.

While some German and Eurozone stats impressed earlier in the week, Germany’s September industrial production results, published yesterday, contracted more sharply than expected.

Yesterday also saw the European Commission announce that it was cutting its Eurozone growth forecasts. While the EC stopped short of predictions for a recession, the slow growth outlook left the Euro unappealing this week.

This was due in part to global trade fears impacting economic activity.

The Euro found some relief in today’s German trade balance report, which showed exports rebounding more strongly than expected. However, amid US Dollar resilience, EUR/USD remained near weekly lows.

US Dollar (USD) Exchange Rates Slip on US-China Uncertainty

The US Dollar (USD) has put in a strong performance for most of this week, seeing a jump in demand on reports that the US and China were getting closer to a preliminary deal on trade.

News that the two superpowers are planning to roll back some of the tariffs already imposed have only further boosted demand for the US Dollar.

The US economy has been notably impacted by the US-China trade war, so this news was seen as a positive for the US outlook.

The US Dollar slipped slightly from its weekly highs today amid rumours of deteriorating trade relations.

An anonymous Washington source reports disagreements between US officials regarding a preliminary trade deal, or waiting for China to give more ground on key issues.

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

The Euro to US Dollar (EUR/USD) has been weaker amid concerns of Eurozone growth and US-China trade hopes. This means that the pair could see a shift in direction if upcoming Eurozone data impresses, or trade relations worsen.

Analysts are warning that the strong rise in US-China trade hopes could easily be knocked if there are fresh negative comments regarding relations from officials. A perceived deterioration could see the US Dollar shed recent gains.

As for data, a slew of influential Eurozone ecostats could drive Euro movement next week.

ZEW’s German and Eurozone economic sentiment stats will come in on Tuesday, followed by German inflation and Eurozone industrial production on Wednesday.

However, the most influential data will come towards the end of the week. German and Eurozone growth, as well as French and Eurozone employment and French inflation stats will come in on Thursday. Eurozone inflation stats will round off the week on Friday.

Some key US data, including inflation rate and retail sales data, could also influence the Euro to US Dollar (EUR/USD) exchange rate next week.