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EUR to USD Exchange Rate Struggles to Hold 2-Year-Best amid Optimistic US Job Figures

August 6, 2020 - Written by Frank Davies

While Eurozone data continues to impress investors, markets are hesitant to keep buying the already strong Euro to US Dollar (EUR/USD) exchange rate even higher. With some of this week’s noteworthy US data beating expectations, the US Dollar is doing a little better at avoiding further losses. Still, the US economic outlook remains concerning amid the nation’s high number of coronavirus infections and deaths, so the pair remains near its best levels.

After opening this week at the level of 1.1779, EUR/USD briefly slipped lower. However since the middle of the week the pair has been trending with an upside bias.

While EUR/USD has been unable to make it quite as high as last week’s 2 year best level of 1.1904, the pair has been trending close to those highs on multiple occasions.

At the time of writing on Thursday afternoon, EUR/USD is trending in the region of 1.1850. This puts it just around half a cent below last week’s multi-year best.

EUR Exchange Rates Continue to See Support in Strong Eurozone Outlook

While the Euro has been struggling to hold its ground at its best levels or advance further, the outlook for the shared currency remains appealing and fairly bullish overall.

Strong Eurozone data has not been enough to boost the Euro even higher as it simply hasn’t been that surprising to investors.

Much recent Eurozone data has beaten expectations, making markets more hopeful that the Eurozone is weathering the coronavirus pandemic better than other major economies.

As a result, Euro movement was little impacted by today’s German factory orders data, despite it coming in well above expectations.

German factory orders were expected to slow slightly in June, to 10.1% month-on-month. However, the report came in at an impressive 27.9%, showing a surprising surge of orders.

The data supported the Euro, and the shared currency’s outlook wasn’t particularly influenced by the day’s slightly weaker than expected Eurozone construction PMI data.

Still, despite a strong outlook for Eurozone data and the nation’s resilience to the coronavirus pandemic so far, the Euro has been pressured slightly by uncertainty over how a ‘second wave’ of infections might hurt the Eurozone.

Spain has seen a fresh surge in coronavirus infections in recent weeks. In recent sessions, Spain reported its highest daily infection count since May.

Concerns that Spain could see a new major lockdown have been limiting Euro demand.

USD Exchange Rates Hold Above Lows as US Job Stats Beat Forecasts

Mixed US data this week has made it harder for the US Dollar to mount a solid recovery from the plummet it saw last week.

The US outlook is weak overall, amid concerns about the health of the US economy during the coronavirus pandemic. The pandemic has hit the US particularly hard due to the US government's poor handling of containing the virus.

Still, today’s US data did beat forecasts and this has been enough to help the US Dollar to hold above its worst levels.

US jobless claims came in lower than forecast, a sharp drop from the previous jobless claims report.

However jobless claims were still well over 1million overall.

According to Dominic Rushe, US Business Editor for The Guardian:

‘Claims dipped last week after two weeks of rises but the latest figure from the department of labor marked the 19th week in a row that claims have topped 1m. Before the coronavirus pandemic gripped the US, the record for weekly claims was 695,000 in October 1982.’

EUR/USD Exchange Rate Forecast: Markets Highly Await US Non-Farm Payrolls Report

This week’s US data has been broadly mixed so far. Wednesday’s US job stats were concerning while today’s jobless claims weren’t as bad as expected.

These figures are relatively low influence though, compared to the key US Non-Farm Payroll report.

The US NFP report will be published during tomorrow’s American session. US unemployment is expected to have recovered slightly, but following Wednesday’s ADP data investors are highly anxious that the NFP data could disappoint as well.

Poor US job stats could lead to a fresh slump in the US Dollar as market concerns about the health of the US economy would worsen.

On the other hand, stronger than expected US Non-Farm Payroll data could be a pleasant surprise for US Dollar investors and lead to a rebound in demand for the currency.

As for the Euro, tomorrow’s German trade data is unlikely to be highly influential. Euro to US Dollar exchange rate investors are more likely to focus on global coronavirus developments and US data.
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