EUR/USD: Euro Remains Vulnerable Ahead Of Sentiment Data

The euro fell versus the US dollar each day across the previous week. The euro US dollar exchange rate tumbled 1.3%, breaking through the important $1.10 psychological level, hitting a fresh 2020 low of US$1.0942. Whilst eurozone data disappointed, solid US number and continued flows into safe havens amid coronavirus concerns fuelled the slump.

At the start of the new week, EUR/USD is consolidating losses as investors look ahead to euro sentiment data today and US Federal Reserve Chair Jerome Powell’s appearance before congress later in the week.

EUR/USD: Euro is holding up on Monday ahead of the euro sentix investor confidence index

Analysts are expecting the data to show that investor confidence declined in February to 5.9. down from 7.6 in the previous month.

Last week, data from the eurozone and notably Germany was particularly disappointing, suggesting that the bloc’s economy remains weak. At the beginning of this year, data had improved slightly raising hopes that the slump, especially in the manufacturing sector was bottoming out. However, numbers last week suggest that this might not be the case at all and in fact, data could get worse before it gets better.

Looking ahead, this week sees the release of eurozone and German GDP data and eurozone industrial production data which will be closely watched to see whether the weakness in Germany’s print is replicated in the bloc.

EUR/USD: The dollar ended the previous week on a strong footing

US data prints across the week had been broadly solid and the most closely watched data release, the non-farm payroll beat expectations. The US created 225,000 jobs in January, well ahead of the 160,000 forecast. Average hourly earnings increased 3.1%, beating estimates of 3% growth. The data confirmed that the US economy is on firm footing, which boosted the dollar.

This week investors will continue watching developments surrounding coronavirus and attempting to gauge the potential impact on the Chinese and global economy. The higher the received impact the greater the flows expected into the safe haven dollar.

Later in the week investors will also be looking towards Federal Chair Jerome Powell as he gives a semiannual testimony before Congress. A confident sounding Powell could boost the greenback.

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