EUR/USD Exchange Rate Rises as German Retail Sales Tumble in January
The Euro to US Dollar rose by 0.2% today, with the pairing currently fluctuating around $1.20.
The Euro rose against the ‘Greenback’ today despite worse-than-expected German Retail Sales in January.
Today’s data revealed that German retail sales fell by -4.5% month-on-month in the first month of 2021.
Analysts at Reuters commented on the report:
‘German retail sales tumbled more than expected in January as the COVID-19 lockdown and the withdrawal of a temporary cut in sales tax hit consumer spending in Europe’s largest economy.’
Germany is also due to face an extended lockdown until late March.
Consequently, EUR investors are becoming more concerned about the outlook for the German economy, which the largest within the Eurozone.
Analysts at Reuters commented:
‘Germany plans to extend its coronavirus lockdown until March 28 but will allow small private gatherings from Monday, a draft agreement for talks between Chancellor Angela Merkel and leader of the federal states showed.’
However, the EUR/USD exchange rate has benefited from broader weakness in the ‘Greenback’ as risk-sentiment continues to improve, limiting the appeal of the safe-haven USD.
US Dollar (USD) Struggles Despite Coivd-19 Stimulus Optimism
The US Dollar failed to rise against the single currency today despite growing optimism that US President Joe Biden’s $1.9 trillion stimulus plan could successfully pass through the Senate.
The stimulus package has already gained support from the House of Representatives and is now widely expected to clear the Senate this week.
Meanwhile, strong US ISM Manufacturing data for February has also contributed to a strengthening ‘Greenback’.
PNC Chief Economist Gus Faucher commented:
‘Strong consumer demand for goods, increasing business investment, a roaring housing market and global economic growth are all supporting U.S. manufacturing.’
Today also saw the release of the latest ISM-NY Business Conditions Index for February, which fell to 35.5.
As a result, USD investors are becoming more concerned about the outlook for the US economy, the largest economy in the world.
EUR/USD Forecast: US Employment Data in Focus
US Dollar investors will be looking ahead to the US ISM Services PMI. Any improvement in the outlook for the US economy could provide a boost for the USD/EUR exchange rate.
Tomorrow will also see the release of the US ADP Employment Change data for February.
Any signs of rising unemployment in the US, however, could weaken the ‘Greenback’.
Euro investors will be awaiting tomorrow’s release of the Eurozone’s PMI Composite report for February.
If the outlook for the Eurozone’s economy continues to deteriorate, however, then the EUR/USD exchange rate would fall.