EUR/USD Stabilizes as USD Finally Starts To Recover

EUR/USD Stabilizes as USD Finally Starts To Recover
TradeGM Analysis date_range May 27th, 2021

The EUR/USD has been trading at 1.2255, up 0.34% on the day and has even touched a daily high of 1.2262. This has been the pair’s highest level since January 2021. 

According to FX Street, “The EUR/USD pair trades above 1.2200, as the greenback fell this past week, on the back of speculation that the US Federal Reserve will have to tighten its ultra-loose monetary policy sooner than anticipated. Fed chief Jerome Powell has repeated multiple times that the current policy will remain in place until they see “substantial further progress” toward its goals of full employment and price stability. 

The Euro has had a steady increase early this week and continued to surge through Tuesday. The main reasons for its growth have been news that the German Ifo Business Confidence Index performed excellently in May (the index’s reading came in at 99.2, up from 96.8 and above the forecasted of 98.2) and COVID-19 cases dropping all over Europe. The index’s performance has accelerated over the last four months, and its surge has brought overall confidence to the European business sector. 

Steady growth 

One of the main reasons for overall positivity around the Euro has been high expectations for the tourism industry restarting this summer. With a big part of the European population already vaccinated, it seems that the pandemic is coming to an end. This comes after over a year and a half of the world being in a practically permanent lockdown. 

Despite Germany’s weak GDP for the first quarter of 2021, the country came in at -3.2% (YoY) and -1.8% (MoM). No negative sentiment was felt against the Euro. All the EU member states, including Germany, have suffered through the third way of COVID-19 in early 2021. Germany’s economy is technically in decline, but the successful vaccine program has kept investors positive. 

Europe Reopening 

According to a top EU official, the EU plans to reopen for the summer season and is on a safe track to welcome back tourists following the pandemic. During a recent summit, the president of the European Commission, Ursula von der Leyen, announced that over 300 million vaccines would have been delivered to member states by the end of this week, with another 100 million expected by June. 

“It is undeniable that we have made great progress since May, we see cases and hospitalization on a downward trend,” Ursula von der Leyen commented. She added that the bloc is very likely to achieve its goal of vaccinating over 70% of its adult population by the mid-summer. 

“If we continue like this, we have confidence that we will be able to safely reopen our societies,” she added.  

The bloc agreed that by the end of 2021, they would donate at least 100 million vaccines to low- and middle-income nations. The donations may not stop at 100 million. 

“Member states have expressed the views which lead us to believe that we actually go beyond that capacity to deliver 100 million doses to our partners,” said Charles Michael, president of the European Council, at the news conference. 

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.42% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. X