Euro to US Dollar Exchange Rate Slides as Rising Bond Yields Support USD
Despite some key US data falling short of expectations yesterday, the Euro to US Dollar (EUR/USD) exchange rate ultimately ended up sliding due to a combination of concerning Eurozone data and recovering US bond yields.
The downside trend seen by EUR/USD last week has continued since the pair opened at the level of 1.1220 yesterday.
EUR/USD briefly edged higher when disappointing US retail data was published, but after that the pair tumbled further. At the time of writing on Tuesday morning, EUR/USD was trending near a low of 1.1195 – the worst EUR/USD level in almost a month.
Investors have been even more hesitant to buy the Euro following yesterday’s slew of worse than expected Eurozone data, which indicated that the Eurozone economic slowdown may be lasting longer than economists feared.
Euro (EUR) Exchange Rates Unappealing as Eurozone Data Continues to Disappoint
Some mixed Eurozone data last week briefly bolstered market hopes that there were signs of strength in the Eurozone economy, following months of slowdown.
However, not enough of last week’s data was impressive enough to improve the Euro’s (EUR) fortunes, and this week’s data has been even more disappointing so far.
Yesterday saw the publication of the Eurozone’s final March manufacturing PMI data, which fell short of already bearish projections and indicated that the Eurozone’s manufacturing sector was even worse than expected.
On top of this, the Eurozone’s March inflation rate stats unexpectedly showed inflation slowing, dampening hopes that the European Central Bank (ECB) could take a more hawkish tone on European monetary policy any time soon.
These stats continued to weigh heavily on the Euro today, while demand for the US Dollar improved a little.
US Dollar (USD) Exchange Rates Sturdy as Bond Yields Recover
Last week saw mixed movement in the US Dollar (USD), as the currency was briefly undermined by a slump in US Treasury bond yields before seeing slightly stronger performance towards the end of the week as investors bought it back from its lows.
The US Dollar has continued to recover this week so far, at least against a broadly unappealing Euro.
Investors were briefly concerned by yesterday’s highly disappointing US retail sales results, but it was followed by some stronger than expected manufacturing PMI data from ISM which helped the US Dollar to steady.
US business inventories were also better than expected according to yesterday’s January report.
As concerns about slowing global growth ebbed slightly after last week’s jitters, major US Treasury bond yields have also been recovering from last week’s 15-month-lows.
This helped further recovery in US Dollar movement this morning.
Euro to US Dollar (EUR/USD) Exchange Rate Investors Await Wednesday’s Major Data
Save for upcoming US durable goods orders data, there is not much for Euro to US Dollar (EUR/USD) exchange rate investors to react to until tomorrow’s slew of Eurozone and US data.
If US durable goods orders beat expectations today, EUR/USD may be in for further losses amid signs of resilience in US growth.
Tomorrow’s major stats include Markit’s final March services and composite PMI data from the Eurozone, as well as the bloc’s February retail sales results.
Following disappointing data earlier in the week, market demand for the Euro is unlikely to improve much unless tomorrow’s data impresses investors.
However, even if Eurozone data is mixed, EUR/USD could still slide if Wednesday’s US non-manufacturing PMI data from ISM is highly disappointing.
Other US data to keep an eye out on includes Wednesday’s employment change data from ADP, and Markit’s own US PMI figures.
As well as data, continued shifts in market risk-sentiment and the movement of US bond yields may also influence the Euro to US Dollar (EUR/USD) exchange rate.