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Mon 15 Jul 2024 08:50GMT

Euro to US Dollar Exchange Rate Surges on Latest Signs of US Economic Slowdown

Published: 2 Dec at 4 PM Tags: Euro, Dollar, America, Eurozone, USA, China, Germany,

Could the Euro to US Dollar (EUR/USD) exchanged rate be starting December off on a bullish note? After weeks of mixed or poor performance in November, the pair saw a surge in demand on Monday as investors digested the latest Eurozone and US ecostats.

It follows last week’s session, in which EUR/USD struggled for direction, opening the week at the level of 1.1021 and closing just slightly lower at around 1.1017.

The Euro remained unappealing last week and US-China trade hopes kept the US Dollar appealing, but as EUR/USD was already relatively close to lows investors were hesitant to sell the pair much lower.

EUR/USD touched on a monthly low of 1.0983 on Friday, but investors were hesitant to keep the pair near those lows.

Then today, a combination of stronger Eurozone data and weaker US data left the Euro to US Dollar surging in the afternoon as growth outlooks appeared to shift. At the time of writing on Monday, EUR/USD trended near a high of 1.1073 – the pair’s best levels in over a week.

Demand for the Euro has improved this week due to numerous factors. Over the past couple of weeks, Eurozone data has started to show more signs that the bloc’s economy is finally recovering after months of slowdown.

Last week’s data showed Eurozone confidence and inflation stats beating forecasts, but analysts remained concerned that the improvement may be temporary.

The Euro’s support was bolstered further today, as Markit’s final November manufacturing PMIs for Germany and the Eurozone overall beat projections. The data also showed more optimism about the outlook for manufacturing activity.

However, while this domestic news supported the Euro, the shared currency also enjoyed much stronger demand due to fresh weakness in its rival, the US Dollar.

The US Dollar had enjoyed resilient demand and support in recent weeks due to persisting hopes that the US and China were getting closer to reaching a preliminary trade deal of some kind.

However, US-China trade tensions worsened slightly last week, and this week markets started out vulnerable as December was already underway with no major developments in talks.

Then, in the afternoon, a set of concerning reports knocked the US Dollar and sent it plummeting, making investors less eager to keep holding onto the US currency.

US manufacturing PMI data from ISM was expected to have recovered slightly from 48.3 to 49.2, but instead the figure slumped to 48.1. It worsened market concerns about the possibility of a US recession and was the primary cause of EUR/USD gains today.

On top of this, US-China trade hopes took a hit this afternoon as US officials indicated that US tariffs on China could rise if no trade deal is reached.

Could EUR/USD keep up this bullishness? While the pair may struggle to keep all the gains it has seen this afternoon, upcoming data could make it easier for the pair to hold its ground or advance further.

No notable Eurozone or US data will be published tomorrow, but a Wednesday slew includes the Eurozone’s final November services and composite PMIs, as well as US non-manufacturing PMI data from ISM.

Thursday will follow with Eurozone employment, growth and retail stats, as well as US trade balance and factory orders results from October.

If Eurozone data continues to impress investors and US data continues to disappoints, or if US-China trade relations worsen further, the Euro to US Dollar exchange rate could be in for notable gains this week.
As of Monday, 2nd December 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1682, GBP USD exchange rate was 1.2939, and GBP CNY exchange rate was 9.1079.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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