EUR/USD Exchange Rate Soars as US Economic Outlook Darkens
The Euro US Dollar (EUR/USD) exchange rate rose by over 1% today, with the pairing currently trading around $1.120. The US Federal Reserve (Fed) cut its rates to 0.25% on Sunday to prop up the US economy amid the escalating coronavirus pandemic.
The Fed’s said in its statement:
‘The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses.’
US Dollar (USD) investors have become jittery as the coronavirus threatens to weaken the American economy.
Jerome Powell, the Chairman of the Fed, commented:
‘We will maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals.’
‘Greenback’ traders will be awaiting today’s G7 call on the coronavirus.
Any downbeat comments regarding the virus’s effect on the global or American economy would weaken the USD/EUR exchange rate.
EUR Exchange Rate Rises as Single Currency Benefits from Weaker ‘Greenback’
The Euro (EUR) has benefited from its negative-correlation with the US Dollar (USD) today as investors flock to the single currency’s safe-haven status.
However, as investors now expect further fiscal stimulus from European authorities, we could see the Euro’s gains against the ‘Greenback’ being short-lived.
Ursula von der Leyen, the President of the European Commission, said on Friday:
‘It is not possible to stop the virus, and it is of utmost importance to slow down the spread of the virus … I am convinced that the EU can withstand this shock. But each member state needs to live up to its full responsibility and the EU as a whole needs to be determined, coordinated and united.’
Euro (EUR) investors are paying close attention to coronavirus developments.
We could see the single currency fall against its peers if Europe’s governments take action to contain and reduce the effects of Covid-19 on the bloc’s economy.
EUR/USD Outlook: Could the Euro Sink on Poor German Economic Sentiment?
Us Dollar (USD) traders will be awaiting tomorrow’s release of the US Retail Sales report for February. Any signs of improvement could provide some uplift for the ‘Greenback’.
However, economic data is likely to be overlooked amid growing concerns over the coronavirus.
If we see the global pandemic continue to escalate, we will likely see the US Dollar weaken as its economic outlook darkens.
Euro (EUR) investors will be awaiting tomorrow’s release of Germany’s ZEW survey of economic sentiment for March.
With the figure forecast to plunge by -23.4, we could likely see the EUR/USD exchange rate drop.