- Euro (EUR) rises after stronger German GDP data
- Germany in 3rd covid wave could limit gains
- US Dollar (USD) trends lower on dovish Powell
- Fed Chair Powell to testify for a second day
The Euro US Dollar (EUR/USD) exchange rate is edging higher after booking mild losses in the previous session. The pair settled -0.05% lower on Tuesday at US$1.2150 snapping a three day winning streak after a choppy session. At 09:15 UTC, EUR/USD trades +0.1% at US$1.2165. The pair trades approximately at the same level that it did at the start of the month.
The Euro is trending higher thanks to US Dollar weakness and upbeat German GDP data. German economic activity was upwardly revised for the final three months of 2020 with 0.3% quarter on quarter growth, up from 0.1% in the initial estimate.
The Euro traded almost entirely at the will of the US Dollar on Tuesday amid a lack of any real fundamentals from the Eurozone. Inflation data for the Eurozone was released. However this was the second reading and coincided with the first reading so produced little to no market reaction.
The Euro has experienced softer demand recently in part because of the sluggish vaccine rollout and concerns over the spread of covid variants. German Chancellor Angela Merkel reportedly warned her party that Germany was in the midst of a third covid wave.
Meanwhile the US Dollar was boosted on Tuesday by a stronger than forecast consumer confidence figures for February, which saw the headline index rise to 91.3 against a drop to 90.00.
However, US Federal Reserve Chair Jerome Powell was the main event in a semi annul testimony before Congress. The Fed Chair stuck to a dovish tone reassuring investors that the Fed wasn’t about the start tapering support. However, he also noted that the outlook for the US economy was starting to look more optimistic amid a strong vaccine rollout programme and expected US fiscal stimulus.
Today Fed Chair Powell will appear for a second time before Congress. Whilst his appearance will be closely watched he is unlikely to add anything new.