Euro US Dollar Exchange Rate Reaches New Month Best as USD Continues to Tumble
Despite a lack of particularly strong support for the Euro (EUR), the Euro US Dollar (EUR/USD) exchange rate continues to climb higher this week. This is largely due to continued weakness in the US Dollar (USD).To get more news about WikiFX, you can visit wikifx.com official website.
After opening last week at the level of 1.1900, EUR/USD spent most of the week advancing. EUR/USD gained over half a cent throughout the week overall, and closed the week in the region of 1.1981.
EUR/USD is once again jumping higher. EUR/USD has touched on a monthly best level of 1.2044, and is currently trending in the region of 1.2037.
US Dollar strength could remain the primary cause of movement until later in the week, when key Eurozone data and European Central Bank (ECB) news is expected.
Euro (EUR) Exchange Rates Benefitting from Hopes of Improving Eurozone Vaccination Rollout
Demand for the Euro continues to be driven largely by strength in rival currencies. The Euros gains since last week have been due mostly to the weakening Pound (GBP) and US Dollar.
In particular, the Euro has a negative correlation with its biggest rival the US Dollar. This means the Euro has been strengthening as the US Dollar falls in recent weeks.
On top of this though, hopes are rising that the Eurozones coronavirus vaccination situation is improving. According to Yohay Elam, Analyst at FXStreet:
The good news for the old continent is that the vaccination campaign has picked up and bottlenecks seem to have been removed. Nearly 25 doses have been given per person – or nearly 20% have received at least one shot.The US Dollar has plummeted in recent weeks, as markets unravel speculation that the Federal Reserve could tighten US monetary policy any time soon.
Unsurprising US inflation rate data doused any hopes for a surge in inflation. Investors are still selling the US Dollar in favour for currencies considered riskier, for their higher yields.
According to Valentin Marinov, Head of G10 FX Strategy at Credit Agricole:
‘Indeed, the USD rally is all but distant memory by now and the currency’s underperformance seems to reflect the apparent divergence in the outlook between the slumping UST yields and the rather perky bond yields elsewhere,Speculation for a more hawkish Federal Reserve as all but evaporated, but could strong Eurozone data lead to higher European Central Bank (ECB) tightening bets？
The ECB is expected to hold its April policy decision on Thursday. If the bank takes a more optimistic tone on the Eurozone economy, it could lead to stronger support for the Euro.
Euro and US Dollar investors are also awaiting upcoming data. While there will not be much notable US data in the coming sessions, some Eurozone data towards the end of the week could cause Euro movement.
French and Eurozone confidence data are due for publication on Thursday, as are US jobless claims and home sales.
Then, Eurozone PMI projections for April will be published on Friday. These could cause big movement in the Euro US Dollar (EUR/USD) exchange rate if they cause any surprises about the Eurozone outlook.