- Eurozone economic recovery
- Weak U.S Economic Data
- Euro Resurgence
The EUR/USD was trading higher, Tuesday morning, after rising to five days high on Monday as the Dollar weakened across the board on lower yields. The greenback came under pressure early in the week, falling 0.55% against other major currencies, as traders reacted to a plethora of weak U.S economic data.
Euro Bounce Back
EUR/USD rebounded to five-day high as it continues to benefit from weakness in the greenback. The Euro has come under pressure in recent weeks, dropping from three-month highs on a lack of new catalysts to offer support to the single currency.
The Euro had been on an impressive run against the Dollar, rallying to three-month highs as traders reacted to the €1.35 trillion stimulus plan. With the news already priced in, Euro strength has come under pressure amidst concerns it remains overstretched given the uncertainty in the Eurozone.
Economic recovery following the COVID-19 pandemic is one of the tailwinds that continues to curtail Euro gains against the Dollar. Similarly, disagreements among Euro leaders on how to go about revitalizing the struggling economy has also weighed heavily on the Euro in the forex market.
The U.S dollar has also come under pressure in recent days tanking from four days highs on Monday as weak economic data raised concerns about the health of the U.S economy. Immediate data indicate that U.S Home sales declined by a massive 9% against an expected decline of 3%. The median existing-home prices were on the receiving end, as well, declining to $284,600 against $278,200 in May.
On the other hand, Europe appears to be on a recovery path with Consumer Sentiment Index improving to -14.7% from -18.8% boosted by the reopening of economies and monetary stimulus plans. The mixed economic releases in the U.S and the Eurozone continue to weigh heavily on the EUR/USD.
Amidst the weak economic data, the Euro is again registering gains against the Dollar after bottoming out of three-week lows. The bounce-back should become clear when the U.S reports its PMI data for June as well as New Home Sales for May.