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EUR to USD Exchange Rate Rebounds from Weekly Worst despite Mixed EUR Support

July 1, 2019 - Written by David Woodsmith

Due to some stronger than expected Eurozone data, concerns about this morning’s worse than expected Eurozone factory data lightened and the Euro to US Dollar (EUR/USD) exchange rate was able to rebound from its worst levels in over a week. The US Dollar remained stronger overall though, as investors digested the weekend’s US-China trade developments.

Weakness in both Eurozone data and US data throughout last week caused EUR/USD fluctuations, and the pair only slipped slightly from the level of 1.1385 to 1.1370 overall.

When markets opened this morning though, EUR/USD reacted to the US-China trade truce by quickly slumping around half a cent and touching a weekly low of 1.1319, before rebounding slightly and trending closer to the level of 1.1342 at the time of writing.

EUR/USD was ultimately able to hold above this morning’s lows thanks to the Eurozone’s latest unemployment data, and uncertainties about US trade tensions kept the US Dollar from surging too high.

EUR Exchange Rates Avoid Worst Lows as Eurozone Unemployment Hits 11 Year Best


Despite broad concerns persisting about the health of the Eurozone’s economic outlook, as well as the strength of rivals putting additional pressure on the Euro this week already, the shared currency did find some support in Eurozone data this morning.

The Eurozone’s May unemployment rate was published, and unexpectedly improved from 7.6% to a better than expected 7.5%.

This marked the Eurozone’s best unemployment rate since July 2008, and the news bolstered Euro demand, helping it to recover from the morning’s worst levels.

However, the Euro still remained lower versus the US Dollar overall this morning, as the US Dollar was more appealing following the weekend’s US-China trade developments.

As the Euro and US Dollar share a negative correlation, the US Dollar’s gains in response to this news made the Euro weaker too.

On top of this, the morning’s other Eurozone data was largely disappointing.

Markit’s final June manufacturing PMIs for the Eurozone fell short of projections in many key prints. French, German and overall Eurozone figures disappointed and confirmed the fifth consecutive month of shrinkage for the bloc’s factory sector.

According to Chris Williamson, Chief Business Economist at IHS Markit:

‘The downturn is also showing no signs of any imminent end. The survey’s forward-looking indicators remained worryingly subdued in June, adding to concerns about the economy in the second half of the year.’


USD Exchange Rates Rebound as US and China Reach Truce over Trade Tensions


Investors bought the US Dollar back from its recent lows this morning, amid relief that the US and China had agreed to pause trade war escalations and attempt another round of trade negotiations.

The US Dollar had been weak over the past month due to rising Federal Reserve interest rate cut bets, combined with concerns that US trade protectionism could have a negative impact on the US economic outlook.

As a result, investors were broadly relieved when a meeting between US President Donald Trump and China President Xi Jinping at the weekend’s G20 Summit in Osaka ended with an optimistic outcome.

The nations announced that trade escalations would be put on hold and that trade talks would resume.

The US Dollar’s gains this morning were limited however, as some analysts remained anxious that relations between the US and China would not necessarily improve notably despite this truce.

EUR/USD Exchange Rate Forecast: Slews of Data Could Drive Movement


Continued development and reactions in regards to US-China trade relations are likely to remain highly influential for the US Dollar, which will in turn influence the Euro and EUR/USD.

However, as European Central Bank (EUR) and Federal Reserve speculation remains a vital part of recent Euro to US Dollar exchange rate movement, upcoming data and other news that influences rate cut bets will also be in focus.

This afternoon will see the publication of ISM’s June US manufacturing PMI, which will give investors a better idea of how the key US factory sector is performing.

It will be followed tomorrow by German retail sales, with services and composite PMIs for the Eurozone and US due on Wednesday.

Perhaps the week’s most influential stats will come in later in the week though, including Eurozone retail sales and the key US Non-Farm Payroll report which could cause some late-week Euro to US Dollar exchange rate movement.
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