Euro to US Dollar Exchange Rate Fails to Hold Recovery Following Week of Losses
Last week saw a stronger US Dollar (USD) pushing the Euro to US Dollar (EUR/USD) exchange rate lower, and this week so far the Euro (EUR) still lacks the drive to sustain a solid recovery. US trade hopes are keeping pressure on the pair today.
After opening last week at the level of 1.1167, EUR/USD briefly hopped to a 2-month-best of 1.1193 before spending the week plunging.
EUR/USD ultimately ended last week just above a 3-week-low of 1.1015. Yesterday’s advance attempt was modest and limited, and at the time of writing on Tuesday EUR/USD continues to trend near the week’s opening levels.
Investors are still hesitant to buy the Euro amid concerns about the Eurozone’s slowing economic activity.
Euro (EUR) Exchange Rates Unappealing amid Lack of Supportive Eurozone News
The Euro has been dragged lower by strength in its rival, the US Dollar, for most of the past week. Due to the negative correlation the currencies share, the US Dollar’s ongoing resilience is weighing on the Euro.
However, the Euro has also been weak due to a simple lack of appeal in the shared currency lately.
Eurozone data continues to indicate that the bloc’s economy is slowing, and German data has indicated that the bloc’s biggest economy remains stuck in recession.
Amid weakness in Germany’s economy and the overall Eurozone manufacturing sector, analysts are warning that the bloc’s other economic sectors could be impacted. According to Yves Mersch, Policymaker at the European Central Bank (ECB):
‘The longer the weakness in manufacturing persists, the greater the risk that other sectors of the economy will be affected by the slowdown as well,
Risks to the growth outlook remain on the downside overall.’
On top of lasting Eurozone economic concerns, the weekend’s fourth Spanish general election in as many years ended with a hung parliament. This caused fresh concerns about political uncertainty in Spain.
US Dollar (USD) Exchange Rates Firm Ahead of US President Trump’s Trade Speech
Following last week’s impressive US Dollar gains, the US currency has so far been able to sustain its gains and continue to trend near multi-week highs against the Euro, its biggest rival.
The primary cause of EUR/USD losses last week was rising hopes that the US and China were finally closing in on reaching a preliminary deal on trade.
While US President Donald Trump said at the end of last week that the US had not agreed to roll back tariffs as China had claimed, markets remain cautiously optimistic over US-China trade relations and this is keeping the US Dollar supported this week.
For now, investors are holding steady on the US Dollar, anticipating a speech from Trump set to take place this evening. According to Neil Wilson from Markets.com:
‘All eyes will on Donald Trump after markets close in Europe as the President is due to deliver a speech at the New York Economic Club later, expected at 17:00 GMT.
This poses all kinds of risks – on everything from China and trade to the Fed and impeachment. Markets will be on tenterhooks. The President’s speeches are akin to throwing a dart blindfolded.’
Euro to US Dollar (EUR/USD) Exchange Rate Investors Await Trump Speech and Major Data
The major focus for Euro to US Dollar (EUR/USD) exchange rate investors today will be the trade speech from US President Donald Trump.
If Trump surprises markets with a more optimistic or soft stance on trade and tariffs, the US Dollar could be in for fresh gains as this would bolster the US economic outlook.
However, the Euro may also benefit if there is any news regarding the softening of US tariffs on EU car sales. It is currently speculated that Trump could delay planned car tariff plans, but further news on this would be influential.
Looking ahead of the speech, key Eurozone and US data will also be published in the coming days. German and US inflation will be published tomorrow, as will Eurozone industrial production.
If these stats surprise investors, they could influence European Central Bank (ECB) and Federal Reserve speculation.
Of course, an upcoming US Congress testimony from Fed Chairman Jerome Powell tomorrow and Thursday could also influence Fed bets and the Euro to US Dollar (EUR/USD) exchange rate.