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Euro US Dollar Exchange Rate Steady as German Investor Moral Suffers from Covid-19 Lockdown Fears

April 13, 2021 - Written by John Cameron

EUR/USD Exchange Rate Rangebound as Germany’s Investor Morale Struggled in March

The Euro US Dollar (EUR/USD) exchange rate held steady today after German investor morale has suffered from fears of further Covid-19 restrictions. The pairing is currently fluctuating around $1.19.

Germany’s ZEW survey of the current economic situation improved by 12.2 points, rising from -48.8 to -61 last month.

ZEW President Professor Achim Wambach was however more optimistic, commenting:

‘The ZEW Indicator of Economic Sentiment is, however, still at a very high level and the current situation is assessed much more positively than in March. Fears of a stricter lockdown have led to a decline in expectations for private consumption. Nevertheless, the outlook for exports is better than in the previous month.’

However, Euro investors are becoming more concerned about Germany – the Eurozone’s largest economy – facing another lockdown.

If this goes ahead, the outlook for the Eurozone’s economy would suffer and limit the appeal of the single currency.

Consequently, the Euro US Dollar (EUR/USD) exchange rate failed to make any significant gains today, as the outlook for the Eurozone’s economy remains largely uncertain.

US Dollar (USD) Steady as US Inflation Figure Rises to Highest Levels Since 2012

The US Dollar (USD) failed to gain against the Euro (EUR) following the publication of the latest US Consumer Prices figure for March, which rose to its highest level since March 2012.

Analysts at Bloomberg commented:

‘U.S. consumer prices climbed in March by the most since 2012, adding to evidence of budding inflationary pressures as the economy reopens and demand strengthens.

‘The consumer price index increased 0.6% from the prior month after a 0.4% gain in February, according to Labor Department data Tuesday. A jump in the cost of gasoline accounted for almost half the overall March advance. The median estimate in a Bloomberg survey of economists called for a 0.5% rise.’

US consumer prices rose by 0.6% month-on-month last month, while the annual rate of inflation rose by 2.6%.

As a result, the US Dollar has benefited but, due to growing economic uncertainty, we could soon see the USD/EUR exchange rate head higher as demand for the safe-haven ‘Greenback’ increases.

EUR/USD Exchange Rate Forecast: Could a Dovish ECB Drag Down the Single Currency?

Euro (EUR) traders will be awaiting tomorrow’s release of the Eurozone’s latest Industrial Production figure.

Any improvement in the outlook for the Eurozone’s economy, however, could provide a boost for the EUR/USD exchange rate.

Tomorrow will also see a speech from the European Central Bank’s (ECB) President, Christine Lagarde.

If she is notably dovish about the Eurozone economy, however, we could see the single currency suffer.

US Dollar (USD) investors will be awaiting tomorrow’s speech from the Federal Reserve’s Chairman Jerome Powell.

Any dovishness about the US economy could further drive demand for the safe-haven ‘Greenback’.

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