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Euro to US Dollar Exchange Rate Holds its Ground despite Rising EUR Volatility

Euro to US Dollar Exchange Rate Avoids Losses even as USD Recovers

Both the Euro (EUR) and US Dollar (USD) have seen mixed movement this week, so the Euro to US Dollar (EUR/USD) exchange rate has seen broadly mixed movement. Even as the US Dollar saw a strong recovery today, the pair was able to avoid notable losses.

Thanks to weak US data and strong Eurozone data, EUR/USD avoided losses last week and edged higher from the level of 1.0831 to 1.0848.

This week’s movement has been a little more bullish in comparison with EUR/USD seeing more of an upside bias. While EUR/USD has been unable to hold the fortnight high of 1.0894 seen earlier, the pair is still trending higher in the region of 1.0872 at the time of writing.

Most of this week’s most significant Eurozone and US data is still ahead. Data published in the coming days could cause some notable Euro to US Dollar exchange rate movement.

Euro (EUR) Exchange Rates Avoid Major Losses despite ECB Rate Cut Speculation

The Euro has been able to avoid major losses against many rivals today, including its biggest rival the US Dollar.

The Euro has recovered slightly following yesterday’s fall on fears over the coronavirus outbreak in Italy. However, after yesterday’s drop and today’s recovery, the Euro is becoming overall more volatile.

Uncertainty over the potential of the coronavirus hitting the Euro, as well as uncertainty over whether the Eurozone economy is recovering or in for months more slowdown, are keeping investors anxious over whether or not to buy the shared currency.

With uncertainty high, even European Central Bank (ECB) interest rate cut speculation has flared up.

However, despite all these factors investors are hesitant to sell the Euro too much. Recent Eurozone data has still been decent, supporting the shared currency’s appeal.

US Dollar (USD) Exchange Rates Rebound from Tuesday Slump

Much of today’s US Dollar movement has been more of a rebound from yesterday’s fall, rather than the US Dollar benefitting particularly from any fresh developments.

As speculation and concern over the coronavirus outbreak mounted yesterday, some analysts noted that the Federal Reserve was one of the few major central banks with the room to alter monetary policy.

As a result, speculation that the Fed could be pressured to cut US interest rates to defend the economy from a potential coronavirus impact knocked the US Dollar lower yesterday.

However, this rise in Fed rate cut bets was short-lived. Fed officials have indicated that there is not yet any sign that a rate cut will be necessary, so bets fell today and the US Dollar regained some ground.

According to Peter Chatwell, Head of Multi-Asset Strategy at Mizuho Bank:

‘The significant dovish tilt being priced in by markets from the FOMC may not materialise and that might cause the next leg of the Dollar rally,’

Euro to US Dollar (EUR/USD) Exchange Rate Could Steady on Upcoming Data

The Euro to US Dollar exchange rate is volatile due to speculation over the coronavirus, the Eurozone and US economies, and central bank expectations.

Amid this current lack of drive in both currencies, upcoming news that influences their outlooks could cause some more solid EUR/USD movement.

Key Eurozone and US ecostats will be published through the end of the week that could give investors more reason to move on the currencies.

Eurozone business and consumer confidence stats will be published tomorrow, but the day’s biggest focus will be US durable goods and especially US growth rate data.

Friday’s session could be even more influential. German unemployment and inflation and French growth and inflation will be published, as will US PCE inflation data and goods trade balance figures.

Of course, ongoing developments in the coronavirus outbreak will continue to influence the Euro to US Dollar (EUR/USD) exchange rate as well.