Euro to US Dollar Exchange Rate Recovers from This Week’s Dip
The Euro to US Dollar (EUR/USD) exchange rate looked set to maintain its recent steady trend this week, as the Euro (EUR) was able to hold against yet another US Dollar (USD) recovery attempt. Coronavirus and PMI news will be the focus for the pair next week.
After opening this week at the level of 1.1846, EUR/USD saw mixed movement. EUR/USD briefly touched on a high of 1.90, but also dipped and touched a monthly low of 1.17.
By the end of the week though, EUR/USD had ultimately avoided losses. At the time of writing, EUR/USD trended close to the week’s opening levels again.
Euro (EUR) Exchange Rates Avoid Losses as Eurozone Outlook Steady
Investors had little reason to shift stances on the Euro last week. There was little in the way of surprising Eurozone data, leaving the Euro’s movement to be driven largely by that of rival currencies.
Essentially, the Euro was able to avoid losses last week as its biggest rival, the US Dollar, remained under pressure amid US economic jitters.
The Euro continues to find support from market optimism over a recovery from the coronavirus pandemic.
The EU signed a deal to mass-produce a possible coronavirus vaccine, and markets are still relatively pleased with the bloc’s handling of the pandemic so far.
US Dollar (USD) Exchange Rates Remain Unappealing despite Recovery Attempts
The US Dollar has attempted to continue a recovery from its worst levels multiple times in recent weeks. However, amid US coronavirus, economic and political uncertainties, these recovery attempts often run out of steam.
This week’s Federal Reserve policy decision offered a brief boost to the US outlook. The bank said that the US economy had weathered the coronavirus pandemic better than expected so far.
However, broad uncertainty persists and the bank has indicated that US monetary policy will remain loose for a very long time.
On top of this, the approaching US Presidential Election, set for November, is keeping pressure on the US Dollar. According to Jane Foley, Senior FX Strategist at Rabobank:
‘This move is mainly about the Dollar,
This is one to be watching closely because there is a lot of political uncertainty and there is a lot of geopolitics and I think this is going to be increasingly seen as we go into the last months of this year and as we go into next year,’
Euro to US Dollar (EUR/USD) Exchange Rate Could be Hit by Rising Coronavirus Infections
Next week’s Eurozone and US economic calendars look a little quieter.
The only notable ecostats due for the Eurozone will be August PMI projections on Wednesday, as well as some confidence figures due throughout the week.
Some US PMI projections will be published in the middle of the week as well. However, an upcoming testimony from Federal Reserve Chairman Jerome Powell may be a bigger focus for the US Dollar.
However, this news may be overshadowed depending on how the ongoing coronavirus pandemic continues to unfold next week.
There are rising concerns that infections are rising at quicker rates in major Eurozone nations like Germany. If the Eurozone’s coronavirus situation notably worsens or there are signs that more lockdown is possible, the Euro could weaken.
Of course, the Euro to US Dollar (EUR/USD) exchange rate’s potential for losses could be limited instead if the US outlook remains filled with coronavirus and political uncertainties as well.