The Euro has jumped higher versus the US Dollar at the start of the new week. The Euro (EUR) US Dollar (USD) exchange rate soared 1.5% on Monday as the markets opened in risk off mode.
EUR/USD hit a 14-month high of $1.1493. The upward surge comes after EUR/USD rallied 2.3% across the previous week and 1.6% across the week before that.
At 07:30 UTC, EUR/USD is trading +165 points (1.5%) at US$1.1448.
Euro Surges On Data, German Fiscal Stimulus
German Industrial production figures revealed that the contraction in the sector was slowing. Whilst this is positive for the euro,however coronavirus has changed everything and Germany is expected to feel the full impact of the toxic combination of supply side and demand side shock.
In response to the upcoming shock expected to hit the German economy, the German government last night agreed to a fiscal stimulus plan to shore up the economy, boosting the euro.
Eurozone investors sentiment data is due for release. The data could dampen demand for the euro. Analysts are expecting investors’ sentiment to drop sharply in March to -12 amid the coronavirus outbreak, down from 5.2 in February.
Dollar Continues To Freefall
The dollar slumped at the start of the new week as investors price in further rate cuts from the Federal Reserve. The Fed cut rates by 50 basis points last Monday in an attempt to shore up the economy in the face of a coronavirus hit. However, the move has failed to calm investor fears, who believe the Fed will need to take further action and make deeper cuts to stabilise the economy.
Ironically, on Friday the US non-farm payroll revealed that 273,000 jobs were created in February. This was well ahead of the 173,000 forecast. Meanwhile the unemployment rate dropped to 3.5% down from 3.6%. The figures indicated that the US economy is in a solid place. However, the number of cases of coronavirus only started escalating at the end of the month.
