Euro to US Dollar Exchange Rate Rangebound as Safe-Haven Demand Increases as Covid-19 Cases Rise Worldwide

January 12, 2021 - Written by John Cameron

STORY LINK Euro to US Dollar Exchange Rate Rangebound as Safe-Haven Demand Increases as Covid-19 Cases Rise Worldwide

EUR/USD Exchange Rate Steady as Demand for ‘Greenback’ Steadily Rises

The Euro to US Dollar (EUR/USD) exchange rate held steady today, with the pairing currently trading around $1.215.

The US Dollar (USD) failed to gain against the single currency today despite demand for the safe-haven ‘Greenback’ rising.

Investors are becoming more concerned about rising numbers of Covid-19 worldwide.

Additionally, US political uncertainty and speculation that the Federal Reserve is reluctant to commit to further economic stimulus are boosting demand for the ‘Greenback’.

In US economic news, today saw the release of the business confidence data for December, which fell to 95.9, down from November’s 101.4.

NFIB Chief Economist Bill Dunkelberg commented:

‘Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.’

However, the USD/EUR exchange rate has remained steady, with some investors more hopeful that Europe’s Covid-19 vaccine rollout could speed up the global economic recovery.

Euro (EUR) Steady as Eurozone Vaccine Rollout Lag Weighs on Single Currency

The Euro (EUR) held steady against USD today as many EUR investors are becoming concerned of the economic effect of the lockdowns employed by many EUR countries.

Meanwhile, Eurozone Covid-19 cases continue to rise, sparking concerns that lockdown measures could remain in place until spring.

Cornelius Hirsch and Arnau Busquets Guardia, analyst at Politico, also commented on the lagging European Covid-19 vaccine rollout programme:

‘The European Union … kicked off on December 27, the start of the Commission’s declared “vaccination days.” But criticism is already rising as the vaccine strategies across the Continent lag behind schedule, leading to a blame game between the European Commission and several member countries.’

News that the Eurozone’s largest economy could grow by 3.5% has also weakened demand for the Euro.

With the figure lower than the German Government’s forecasts, EUR traders are becoming more pessimistic about the outlook for the Eurozone economy.

EUR/USD Outlook: Could a Grim Outlook for the US Economy Increase Demand for Safe-Haven Assets?

Euro traders will be awaiting tomorrow’s speech from Christine Lagarde, the European Central Bank’s President.

Any downbeat comments about the future of the Eurozone’s economy would be EUR-negative.

Tomorrow will also see the publication of the latest Eurozone Industrial Production data for November.

If this shows an unprecedented downturn in the Eurozone’s industrial sector, then we could see the EUR/USD exchange rate begin to suffer.

USD traders will be awaiting tomorrow’s publication of December’s US CPI data.

Any signs that US inflation is pointing towards a struggling US economy would further bolster demand for the safe-haven ‘Greenback’.

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TAGS: American Dollar Forecasts Euro Forecasts