EUR/USD Exchange Rate Heads Higher as US Stimulus Hopes Weaken US Dollar
The Euro to US Dollar (EUR/USD) exchange rate rose to rose today, with the pairing currently trading around $1.227.
The Euro (EUR) rose against the US Dollar today as US stimulus hopes have limited demand for the safe haven ‘Greenback’.
Despite the delay in the US Senate’s vote on the increased stimulus relief checks, global markets are more optimistic that the pandemic relief programme will be accepted in the coming weeks.
Nonetheless, senior Republican Representative, Kevin Brady, was sceptical about the new stimulus, saying:
‘For me, I worry that this whopping $463bn won’t do what’s needed – stimulate the economy, or get the jobless back to work.’
In other US economic news, today will see the release of the latest Chicago Purchasing Mangers’ Index for December.
Any improvement in the outlook for the American economy would further limit demand for the safe-haven USD.
Euro (EUR) Rises Despite Growing Concerns for Eurozone’s Economy
The Euro (EUR) has remained subdued against some of its peers, however, amidst ongoing concerns for the Eurozone’s economy as Covid-19 cases continue to rise throughout Europe.
Several instances of the new strain of the coronavirus has been detected throughout many European countries, sparking concerns that this could increase the need for lockdown restrictions to curb the spread of the virus.
Nonetheless, reports of an EU-China investment deal has limited some of the single currency’s losses.
A senior EU diplomat commented:
‘EU ambassadors broadly welcomed the latest progress in the EU-China talks. The council presidency concluded at the end of the meeting that no delegation had raised a stop sign and that the way for a political endorsement was thus cleared.’
The UK’s Brexit has, however, shaken confidence in the Eurozone economy, which now must shift its economic trading relations.
Alasdair Haynes, chief executive at Aquis Exchange, explains:
‘This is a big bang event and that is one of the things that the market hasn’t truly understood yet.
EUR/USD Outlook: Could Europe’s Worsening Covid-19 Situation Weaken the Euro this Week?
US Dollar (USD) traders will be awaiting tomorrow’s release of the latest US Initial Jobless Claims data.
Any improvement in the outlook for America’s economy would drag down demand for the safe-haven USD.
Additionally, any further news of new Covid-19 vaccines being rolled out across Europe – such as the UK Oxford/AstraZeneca vaccine – would strengthen the EUR/USD exchange rate.
Euro (EUR) traders will be eyeing Europe’s Covid-19 situation.
If this continues to worsen, however, we could see the single currency begin to suffer.