quora Dollar Strengthens, Euro Slumps in the Forex Market
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Dollar Strengthens, Euro Slumps in the Forex Market

On Friday, the U.S. dollar continued to be in demand in the foreign exchange market.

Moreover, it’s the struggling euro is taking a lot of beating on the same day.

The matter happened as investors worry about the stunted growth in the single currency region.

Last Thursday, the dollar has undergone reinforcement by the declaration of the New York Federal Reserve.

The statement indicates it will cut the volume of its open market functions slightly ahead of schedule. It will also be strengthening the liquidity in U.S. funding markets.

Meanwhile, the EUR/USD pair traded at 1.0842 at the FX Market. The pair declined, tumbling as low as 1.0828 overnight, the smallest figure since April 2017.

The U.S. Dollar Index tracking the greenback versus a basket of six other currencies was stable at 98.957 in forex trading. The currency is once more just off heights not seen for over two years.

On the flip side, the GBP/USD pair traded at 1.3058, trading in fairly quiet waters.

Yesterday, the GDP figures for Germany, the eurozone’s leading economy, demonstrated that the growth has come to a halt at the end of the year 2019.

Moreover, it was leaving the economy in a shaken state even before the arrival of the new coronavirus threat.

Further Movement in the Forex Market

Since the global financial crisis, which happened a decade ago, December witnessed the most profound drop in German industrial production.

Adding up to the weak figures, the European Commission’s gloomy stance for the European economy did nothing to improve sentiment surrounding the euro.

The information was indicated in a research note by analysts at Danske Bank.

In a different statement, Danske Bank said, “Although the EC still sees the euro area on a “path of steady and moderate growth” with GDP expanding by 1.2% in 2020.”

The bank added, “The report stressed that risks to the growth outlook remain tilted to the downside, not least with the coronavirus outbreak as a key new downside risk emerging.”

Recently, the Danish bank has reduced its euro area GDP growth projection to 0.8% for 2020, from 0.9%.

The most recent growth amount for the eurozone as a whole are on the arrangement for release.

In addition, they are in anticipation of demonstrating the progress of 0.1% on the quarter, 1.0% on the year.

The probability is for a downside revelation, after the German release.

Elsewhere, the newest U.S. employment numbers are robust, and annual GDP development was 2% last year.

The Federal Reserve also felt positive enough about the banking sector to withdraw repo operations further.

According to the Danske Bank, “Our baseline is now for a continued relative underperformance of European financial assets relative to USD denominated assets.”

Moreover, “Hence, we have revised our EUR/USD profile materially, to 1.07 on 12M, down from 1.15 previously.”

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