EUR/USD Exchange Rate Falls, Eurozone’s Solidarity is Challenged by Covid-19
The Euro US Dollar (EUR/USD) exchange rate fell by over -0.7% this morning, with the pairing currently trading around $1.09.
The Euro (EUR) fell after the Eurozone’s final Markit Manufacturing PMI for March fell deeper into contraction territory, with the figure unexpectedly shrinking to a seven-and-a-half year low of 44.5.
Chris Williamson, the Chief Business Economist at IHS Markit, commented on the report:
‘Company closures, lockdowns and rising unemployment are likely to have an unprecedented impact on expenditure around the world, crushing demand for a wide array of products. Exceptions will be food manufacturing and pharmaceuticals, but elsewhere large swathes of manufacturing could see downturns of the likes not seen before.’
EUR investors continue to eye Italy’s coronavirus developments, with hopes now rising that the nation’s infection rate may be dropping. Italy’s infections rate fell from Sunday’s 3,815 to Monday’s 1,648.
Meanwhile, Spain’s foreign minister, Arancha González, said that the nation’s upwards curve in cases had begun to show signs of flattening out. Consequently, some single currency investors reacted positively as there appears to be some light at the end of the tunnel.
The Euro (EUR) remains under pressure, however, as the Eurozone’s solidarity is being shaken by the Dutch-led opposition to the ‘coronabond’ proposal to help Spain and Italy’s economic crisis amidst the coronavirus pandemic.
US Dollar (USD) Rises as Safe-Haven Demand Boosts the ‘Greenback’
The US Dollar (USD) has continued to push higher today as the global coronavirus crisis continues to dampen market risk sentiment. Instead, investors are seeking out safe-haven currencies like the ‘Greenback’ as opposed to riskier assets.
Joe Manimbo, the Senior Market Analyst at Western Union Business Solutions, Washington, comments:
‘The [Federal Reserve’s] efforts so far are the closest thing to taming the dollar’s strength. But the desire to hold dollars remains elevated ahead of what’s expected to be a punishing second quarter for U.S. and global growth.’
However, US President Donald Trump has warned that of a ‘painful two weeks’ ahead as officials predict an increase of coronavirus caused deaths to soar by up to 240,000.
Mr. Trump told reporters at the White House:
‘I want every American to be prepared for the hard days that lie ahead. We’re going to go through a very tough two weeks. This is going to be a very painful, very, very painful two weeks.’
As a result, we could see the ‘Greenback’ fluctuate against many of its peers as investors react to America’s coronavirus outbreak. Any signs that the world’s largest economy could struggle would prove USD-negative.
EUR/USD Forecast: Could the Euro Sink on Rising European Coronavirus Cases?
US Dollar (USD) investors will be paying close attention to tomorrow’s release of the US Initial Jobless Claims report for March. Any further signs of US unemployment figures plummeting would weaken the appeal of the ‘Greenback’.
The EUR/USD exchange rate will be dictated by Europe’s coronavirus developments this week. If there are signs of increasing cases in Italy and Spain, we could see the single currency drop as the bloc’s economy continues to be weighed down by the pandemic.
