The Euro to Dollar started the week at fresh 2021 lows at 1.1664. However, on Tuesday, the currency pair reversed from the year’s lows as the USD weakens.
Euro to Dollar Rebounds from 2021 Lows
1 EURO to US Dollar is at 1.1751 on Tuesday, August 24, 2021.
The US Dollar shows signs of weakening, exerting pressure on other major currencies. The rising Covid variant cases signal that tapering in monetary policies will not happen. Federal Reserve Chairman Jerome Powell may not announce any hike in interest rates. Demand for safe-haven currencies like the US dollar is waning, while the Euro, a risk asset, is gaining demand. Exchange rate Euro to USD gains strength from the weakening US Dollar.
EUR/USD shows a rebound as the greenback weakens. 1 Euro in USD currency change shows a rebound from the 1.1650 levels.
The currencies of the two most influential economies, the USD and the Euro, are popular among investors. Many investors trade on the single currency Euro and the greenback in the foreign exchange market.
The Euro to Dollar conversion is below the psychological resistance at 1.18 levels. The Dollar to Euro conversion is at 0.8508 on August 24, 2921.
European Union Growth Slows Down
The European Union reports that the Consumer Confidence Indicator has come down from -4 to -5. The overall economic activity depends on consumer spending and financial confidence. The slide in consumer financial confidence is a leading indicator of pessimism in the country.
German GDP q/q has risen from 1.5% in the previous quarter to 1.6% for the second quarter of 2021. The coronavirus was the cause for the decline in GDP in the first quarter of 2021 in the German economy. However, the second quarter has been good for the economy. Private consumption is rebounding, while state spending has grown after Covid-19 restrictions have improved. German GDP may grow 3.7% in2021, predict analysts. Exports and imports grow at a slower pace.
The German Flash Manufacturing PMI is down sharply from 65.9 in July to 62.7 in August 2021 and well below the expected figure at 65.1. It shows slowing growth in factory activities. Manufacturing order volume has come down. Inflation is at a record level, and business sentiment is down, over concerns on supply shortage and pricing pressures. The largest economy in the Eurozone shows signs of weakens with the exchange rate Euro to USD weakening.
German Flash Services PMI shows signs of weakening from 61.8 to 61.5. New orders, production, and inventories have come down in the German service sector.
French Flash Manufacturing PMI has come down from 58.0 in July to 57.3 in August 2021. Though the Purchasing Managers Index is above 50 on industrial expansion, it shows that the economic health of businesses in the French economy has come down. New orders are increasing, though the rate of growth has come down, with weakening factory activity. Tourism has gone up, and job creation has also risen.
French Flash Services PMI has come down from 56.8 in July to 56.4 in August 2021. The Purchasing Managers Index in the services sector has gone down marginally. Eating outside has become difficult as customers have to get a Covid health pass to dine out. The exchange rate Euro to USD is on the decline, and the Manufacturing and Service sectors should improve to pull back the currency change Euro and the Dollar.
The IHS Markit Eurozone overall Flash Manufacturing PMI in the Eurozone, at 62.8 in July, is lower at 61.5 in August, indicating slowing factory activity. Supply chain constraints have brought a slowdown in job opportunities.
The overall Flash Services PMI is almost similar to the previous data at 59.7 in August 2021 and 59.8 in July. New order growth has come down as covid-19 cases are spiking higher.
US Dollar Index Weakens
The US Dollar Index is trading below the 93.00 levels once again. The greenback was above the 93.00 levels last week but weakened later below the psychological mark.
The weaker dollar adds pressure to other currencies.
The US Jackson Hole Symposium will be a virtual meeting on Friday. Investors keenly watch the happenings at this meeting.
EUR/GBP at August Highs
The Euro converter to British Pound is at 0.8560 Sterling. The EUR/GBP pair moved sharply higher to reach the August highs at 0.8590 levels.
The Pound to Euro today is at 1.680 levels at a five-week low. The currency pair is consistently below the 1810 levels, taking support at the 1.1640 levels last week. It shows a marginal rebound from this level.
The hawkish stance by the Bank of England brought some relief to the Sterling, as the British Pound to Dollars trades above the 1.37 levels, amid weakness in the US Dollar.
The Euro to Japanese Yen has been sliding lower since June 2021. It took support at the 128.00 levels last week and saw a mild bounce to 128.87 levels.
The European region has a strong trading relationship with countries like the US, the UK, Japan, and Switzerland. The Covid-19 pandemic has brought restrictions in international trade substantially in 2020 and 2021.
