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Euro to US Dollar Exchange Rate Floundering Near 3-Month-Worst ahead of Federal Reserve Decision

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Euro to US Dollar Exchange Rate Weak as Eurozone Data Fails to Boost Outlook

Despite today’s stronger than expected Eurozone data, the Euro to US Dollar (EUR/USD) exchange rate continues to see poor performance and is struggling to recover from near this week’s lows.

Following last week’s tumble from 1.1090 1.1025, EUR/USD continues to see modest losses this week so far.

EUR/USD briefly dipped to a low of 1.0996 this morning, which was the worst level for the pair since October 2019. At the time of writing, EUR/USD is holding just above the key level of 1.1000.

Euro (EUR) investors are eagerly anticipating data that shows signs of recovery in the Eurozone economic outlook.

US Dollar (USD) investors, on the other hand, are awaiting the tone the Federal Reserve could take on the US outlook this evening.

Euro (EUR) Exchange Rates Struggle to Find Support Even as German Data Beats Forecasts

Investors have been hesitant to buy the Euro too much in recent sessions. This is because much recent Eurozone data has been too mixed to give markets confidence in a Eurozone economic rebound.

Monday’s German business confidence results continued to show signs of weakness, dampening the Euro’s appeal.

Due to lingering uncertainty in the Eurozone economic outlook, today’s Eurozone stats were unable to give the Euro a notable boost even as they beat forecasts.

Germany’s latest consumer confidence data from GfK actually beat forecasts, coming in at 9.9 rather than the expected 9.6. According to Rolf Bürkl, Consumer Expert at GfK:

‘Initial agreements in the trade dispute between the United States and China will also ease the situation in Germany. As an export nation, the country relies on the free and unrestricted exchange of goods.’

US Dollar (USD) Exchange Rates Resilient on Global Risk-Sentiment

The US Dollar has been able to hold its ground against its rival, the Euro, thanks to broad global support.

Thanks to rising market demand for safe haven currencies amid China’s spreading coronavirus concerns, the US Dollar has seen resilient performance.

The US Dollar is a safe haven which is often appealing in times of market uncertainties. While it has not benefitted as much as the Japanese Yen (JPY), it is still more appealing than its biggest rival the Euro.

On top of safe haven concerns, the US Dollar is being supported by signs of strength in recent US data. The Fed manufacturing data from Dallas and Richmond published earlier in the week has been better than expected.

Euro to US Dollar (EUR/USD) Exchange Rate Awaits Fed News and Data

The Eurozone and US economic calendars are set to be much more eventful in the second half of the week, which could see the Euro and US Dollar driven more by data and news than global risk-sentiment.

Coming up first is this evening’s Federal Reserve policy decision. While the Fed is not expected to make any fresh shifts in tone on the US economic outlook, any surprises could influence the US Dollar outlook.

If the Fed becomes more dovish on the US economy or hints that a rate cut is on the way, EUR/USD could be in for fresh gains.

Thursday’s Eurozone data may be even more influential. Euro investors will be watching for signs of Eurozone recovery in German unemployment and inflation data.

Tomorrow’s US growth rate data, as well as any notable developments in global markets, could also influence the Euro to US Dollar (EUR/USD) exchange rate outlook if it surprises investors.