- Disappointing U.S Economic Data
- Resurgent Dollar
- Labor Market Concerns
EUR/USD was up in Friday European trading session after edging lower on Thursday on a resurgent dollar. The greenback was up, strengthening against other major currencies on fears of a second wave of coronavirus outbreak in the U.S. The dollar strengthened despite unemployment data and Producer Price Index data raising concerns about the U.S economy.
A brief rise in demand for the U.S dollar against the Euro sent the EUR/USD pair tumbling from three-month highs. Euro bullishness has come under pressure at the back fo weak economic data in the Eurozone. The latest scare is Italy’s Industrial Output that ell a whooping 42%
The dollar has recouped some of the losses against the Euro on the U.S Bureau of Labor Statistics indicating that the Producer Price Index rose 0.4% in May after contracting by 1.3% in April. The increase came as demand for goods rose 1.6%
While lingering strains in the U.S job market was expected to fuel weakness in the U.S dollar, that appears not to be the case. The jobless claims numbers continue to provide a mixed picture as to the developments in the job market. For the week ended June 6, initial claims fell to 1.54 million from 1.90 million the previous week.
Labor market Concerns
Continued claims also continued to decline, slowly, from 21.3 million in the previous week to 20.5 million for the week ended June 6. The slow recovery in the labor market continues to fuel concerns about the U.S economy. The slow uptake signals that U.S companies and businesses are struggling to generate desired revenues and profits needed to employ more people in the aftermath of the COVID-19 pandemic.
The dollar has continued to shrug off the weak economic data conversely strengthening across the board and sending the EURUSD pair lower after recent rallies. The greenback looks set to continue strengthening across the board heading into the weekend as the possibility of renewed lockdowns to curb the spread of the coronavirus continues to spook traders. Traders are increasingly turning to the U.S dollar as a safe-haven, fueling further sell-off in the EUR/USD pair.
Looking ahead, traders await the Michigan Consumer Sentiment report likely to influence dollar strength.