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Monthly Wrap: EUR – Euro rebounds while the EU suffers from a third-wave of Covid-19

currency-newsMonthly Wrap: EUR – Euro rebounds while the EU suffers from a third-wave of Covid-19
Key Takeaways:
  • Covid-19 fears dampen Eurozone market mood.
  • EU vaccine drive gathers momentum to help EUR recover.
  • EUR Monthly lows: £0.84, $1.17, C$1.47, A$1.52, NZ$1.64
  • EUR Monthly highs: £0.87, $1.19, C$1.50, A$1.56, NZ$1.69
 
The euro has fluctuated over the last month as the EU has grappled with a third-wave of Covid-19 infections.

Europe’s coronavirus deaths have since topped 1 million, with the World Health Organisation (WHO) saying that the EU has now entered a ‘critical point’ of the pandemic.

France also entered a month-long national lockdown last month to limit the spread of Covid-19 and prevent the nation’s hospitals from being overwhelmed.

German lockdown measures were also introduced, limiting the appeal of the single currency as the Eurozone’s powerhouse economy grapples with the coronavirus crisis.

The EU’s vaccination rollout has continued to drive volatility in EUR exchange rates, with the suspension of the AstraZeneca vaccine by some EU countries weighing on the single currency in March.

Last month also saw Germany’s retail sales figures for February unexpectedly fall -9%, sparking further concerns about the outlook for the Eurozone’s biggest economy.

Other economic data releases unexpectedly missing forecasts added some pressure on EUR exchange rates, such as the ZEW economic sentiment index weakening, Eurozone unemployment rising, and core inflation decelerating.

However, the euro has received support recently and made gains as over 100 million vaccinations have been given in the EU, and the European Commission still expects to hit key vaccination targets by the end of June.

The euro has also rebounded due to its negative correlation with the US dollar, which has dipped since the start of April following increased risk appetite and the dovish tone from the Federal Reserve.

Looking ahead, EUR exchange rates could come under renewed pressure if Covid-19 lockdowns in any of the EU’s key economies are extended.

On the other hand, as the EU’s vaccine rollout gathers momentum and 50 million more Pfizer-BioNTech vaccines have been promised in the second quarter, the euro could build on its recent gains.

Euro traders will also be eyeing the latest Eurozone inflation figures for March, with any signs that this could influence the European Central Bank’s (ECB) monetary policy in its rate decision later this month potentially influencing Euro movement.

As a result, a more dovish outlook from the ECB could see the single currency retreat against its peers.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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