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Euro to US Dollar Exchange Rate Near 2-Month-Worst after Safe Haven Surge Hits Outlook

Euro to US Dollar Exchange Rate Steadies after Days of Major Losses 

For the past few months, the Euro to US Dollar (EUR/USD) exchange rate has been trending near its best levels in years. However, a resurgent US Dollar (USD) in the past week has knocked the pair back to levels seen in the middle of the year. 

EUR/USD opened this week at the level of 1.1842 – not far below the pair’s multi-year highs of 1.2000 seen at the beginning of the month. 

After opening the week though, EUR/USD was hit lower and has been tumbling almost all week. Movement has been more mixed since yesterday, but at the time of writing EUR/USD still trends near a two-month low of 1.1634. 

Various factors, such as US coronavirus and political uncertainties, are likely to limit the US Dollar outlook and potential for further gains. 

Euro (EUR) Exchange Rates Fall Back as Rivals Recover 

The Euro (EUR) has seen one of its worst weeks in months over the past week, due to a combination of factors. 

Rising coronavirus second wave fears across Europe, as well as resurgent demand for safe haven currencies like the US Dollar, have been among the primary causes of Euro losses in the past week. 

According to Economists at Danske Bank: 

‘A combination of overly hawkish Fed, resurging lockdowns due to the European coronavirus situation and fading economic momentum was not what we expected a few weeks ago. As markets are coming from an already-upbeat starting point, we see the upside risks to EUR/USD as fading. In effect, markets will need to wait for a new upside story.’ 

Continued signals from European Central Bank (ECB) officials that the bank is prepared to add more monetary policy easing is also weighing on the Euro. 

US Dollar (USD) Exchange Rates Steady after Week of Surging Demand 

The US Dollar has seen a surge in demand over the past week. As global coronavirus second wave fears surge, investors have been looking to safer assets. 

As the US Dollar is a safe haven currency, it has seen a surge in demand from the latest coronavirus fears. This is despite the US having its own economic and political uncertainties amid the coronavirus pandemic. 

After days of strong gains, the US Dollar’s movement is steadying slightly today. According to Strategists at ING: 

‘Pro-cyclical currencies started finding some respite as US equities showed signs of life yesterday and the Dollar faced a correction after a week-long rally, 

While it is tempting to call for the end of the USD run as the risk environment appears to be stabilizing, caution is warranted,’ 

Euro to US Dollar (EUR/USD) Exchange Rate Outlook Awaits Coronavirus News and Key Data 

Investors are likely to continue to assess the past week’s shocking losses during next week’s session. 

If the Eurozone coronavirus outlook worsens and there are signs of fresh lockdown measures in Europe, the Euro is more likely to struggle to recover. 

Similarly, if investors remain hesitant to take risks, the US Dollar outlook will remain supported by safe haven demand. 

However, EUR/USD could also be influenced by key data, due for publication due throughout next week. 

German inflation on Tuesday will be followed by Eurozone stats on Wednesday. Wednesday will also see German retail results. 

The week’s upcoming US data will be even more influential. US growth rate results are due on Monday, and the nation’s latest key Non-Farm Payroll report will come in on Friday. 

The health of the US job market has the potential to notably impact the Euro to US Dollar (EUR/USD) exchange rate outlook.