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Euro to US Dollar (EUR/USD) Exchange Rate Hits 2-Month-Worst as USD Rally Continues

Published: 3 Feb at 5 PM Tags: Euro, Dollar, America, Eurozone, USA,

The Euro to US Dollar (EUR/USD) exchange rate has been tumbling since markets opened this week. Investors continue to become more anxious about the Eurozone outlook as the bloc’s coronavirus situation remains gloomy, while the US Dollar benefits from Euro weakness and stronger than expected US data.

After opening last week at the level of 1.2171, EUR/USD spent the week trending with a downside bias. The pair ultimately shed almost half a cent, and closed the week at the level of 1.2137.

While EUR/USD held above last week’s lows, the pair has slumped even deeper than those levels this week so far. At the time of writing on Wednesday, EUR/USD trends close to lows of 1.2009 - the worst level for the pair in two months, since the beginning of December.

Euro (EUR)

This week’s Euro movement has been bearish, as markets become more anxious about the Eurozone’s coronavirus pandemic outlook. While the Eurozone weathered the pandemic than other major economies through 2020, the bloc has been struggling more in recent months.

Uncertainty over the EU’s struggles to secure coronavirus vaccine doses continue to cast shadows over the Eurozone outlook.

Even forecast-beating Eurozone PMI and inflation stats were unable to boost demand for the Euro.

This is because the data still showed unsurprising weakness overall, and analysts are increasingly expecting the Eurozone’s coronavirus-inflicted weakness to last longer than previously feared.

US Dollar (USD)

The US Dollar has been seeing a rebound in demand in recent weeks. Investors are buying the US currency back from its lowest levels, due largely to profit-taking and weakness in its biggest rival the Euro.

Investors continue to buy the rebounding US Dollar today, with the currency’s recovery rally pushing EUR/USD to its lowest levels in two months.

Recent US data has been impressive, and this has further supported the US Dollar’s appeal.

Today saw the publication of US non-manufacturing PMIs from ISM, as well as ADP employment change stats. Both of these notable figures beat forecasts, boosting US economic sentiment.

Euro to US Dollar (EUR/USD) Exchange Rate Forecast

The Euro to US Dollar exchange rate is tumbling this week, and the pair may continue to fall unless upcoming key data causes the market mood to shift.

Thursday will see the publication of Eurozone retail sales results from December. If this beats forecasts it could offset some concerns about the bloc’s holiday period economic performance and support the Euro.

However, weak data could mean EUR/USD continues to tumble.

Friday will see the publication of some of this week’s most influential data though. US Non-Farm Payroll results from January will be published.

As US NFP data is a key indicator of US economic health, any surprises here could have a big impact on the Euro to US Dollar exchange rate’s appeal.
As of Wednesday, 3rd February 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1336, and GBP USD exchange rate was 1.3648.
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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