Home Forex News EUR/USD Surges as Eurozone Data Continues to Impress

EUR/USD Surges as Eurozone Data Continues to Impress

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  • Germany Economic Recovery
  • Stellar Economic Releases
  • ECB President Warning

EUR/USD started the week on a front foot, rallying by more than 0.3%, as traders reacted to improving economic outlook following COVID-19 disruptions. Signs of Germany’s economic recovery, at the back of improving economic release within the Eurozone economy, continue to strengthen the single currency against the greenback.

EUR/USD Surge

The EUR/USD pair touched 1-week highs in a solid start to a new week. The Euro has so far remained resilient even as the dollar continues to strengthen across the board amidst a spike in risk sentiment in the market.

Time                            : 07-06-2020

Pivot                           : 1.1269

Technical View           : Long Above 1.1289

Target                         : 1.1309 – 1.1318 – 1.1346

Comments                  : Bullish

Last Price                    : 1.1288

Supporting a resurgent Euro is improving economic releases within the Eurozone. For instance, German factory orders rose 10.4% in May as demand continued to increase with the reopening of the Eurozone economy. This marked the largest monthly increase ever, even though order book levels are still below the pre-corona virus levels.

In addition to improving factory orders, the Eurozone PMI has improved significantly, indicating an uptick in manufacturing activity with the easing of lockdown restrictions. France data has already shown a descent of 51.7 PMI.

Amidst the improvements, the European Central Bank President Christine Lagarde has warned the Eurozone economy faces about two years of downward pressure. Lagarde has warned that the disruptions of COVID-19 could last much longer. Likewise, the ECB is ready to keep monetary policy exceptionally loose to counter any fallout triggered by the pandemic.

Risk Aversion Impact

A spike in risk aversion in the market could curtail Euro strength against the dollar. A spike in coronavirus infections is increasingly fuelling demand for safe-havens such as the dollar. A Strengthened dollar could send the pair lower from current highs.

Similarly, a looming trade war between the EU and the U.S is another headwind that could take a toll on the Euro strength; The U.S has already warned that it could hit the EU with tariffs on goods worth $3 billion.

The focus on Monday will be on the release of the Euro retail sales data. In the U.S session, traders await the release of ISM Non-Manufacturing Data and Ism Non-Manufacturing Employment.

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