Despite the recent strength of the US Dollar (USD) and its advance attempts today, the Euro US Dollar (EUR/USD) exchange rate is on track for big gains this week. The Euro (EUR) was able to capitalise on US Dollar losses.
Since opening this week at the level of 1.1764, EUR/USD has seen a surge in demand and has regained much of the losses seen over the past month.
Last night, EUR/USD touched on a high of 1.1924 – the best level for the pair since late-March. While EUR/USD was not able to hold this best level, the pair still trends high in the region of 1.1892 at the time of writing on Friday.
The Euro has capitalised on weakness in its rival, the US Dollar, for most of the week. It has also been benefitting from signs and hopes that the Eurozone’s coronavirus vaccination situation is finally improving.
Analysts expect the Eurozone economy will bounce back in the second half of 2020, despite the concerns around the bloc’s slow vaccination rollout.
However, demand for the Euro slowed towards the end of the week. Its rally against the US Dollar softened, and the shared currency found no support in the latest Eurozone data either.
This morning saw the publication of Germany’s February industrial production report. The data disappointed with a contraction of –1.6%, well below the expected growth of 1.5%.
Higher market demand for riskier assets, as well as continued dovishness from the Federal Reserve, accelerated a US Dollar selloff this week.
What started as selling the US Dollar from highs after a strong rally led to continued losses in the US currency, as markets pulled back on any hawkish Fed speculation.
The Federal Reserve’s latest meeting minutes and comments from Chairman Jerome Powell both showed that the bank was still nowhere near to taking a more hawkish tone on monetary policy. This made investors more eager to take risks and the safe US Dollar weakened.
After one of the US Dollar’s most bearish weeks of the year so far, the currency steadied slightly today and pushed EUR/USD back from its highs.
Written by FTG, Author from Investing
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