Today, the Euro moved several points ahead against the US Dollar to 1.226, a considerable upward move compared to most of the month of May and the majority of April, where it languished at a steady average of around 1.15 to 1.16.
What is perhaps more interesting is that today's movement places the Euro at its second highest valuation against the US dollar since February 2018, where the month was kickstarted by started a jump by over 4.5% between January 1st to 1.25 on January 25th which was regarded as having likely to have been helped by a long-overdue breakthrough in Germany’s coalition talks.
This time, the Euro has been trading well against the US Dollar over the last two months, but this is not necessarily an indicator of a strengthening Euro, instead being more likely to be as a result of the Dollar’s weakness, bearing in mind talks of inflation and inability to source a workforce that is willing to return to employment in the United States as highlighted by the Federal Reserve's James Bullard in last weeks OMFIF meeting.
Europe is largely dogged by ongoing lockdowns and as a result the Eurozone's economy has been blighted, however sentiment remains relatively level on the Euro's value, which has been steady for some weeks until the Dollar's lowering value caused the EURUSD pair to be trading today at 1.23 which is significantly higher than the steady 1.15 to 1.16 of the last few weeks.
Going back a little further, by February 25, The EURUSD currency pair was trading at $1.2243. In the following six weeks, the Euro lost 4.37% and by the end of March was $1.1702 before arriving at a steady middle ground in April and most of May.
As stated by James Bullard in his announcement last week, Federal Reserve Chairman Jerome Powell reiterated today "It seems unlikely, frankly, that we would see inflation moving up in a persistent way that would actually move inflation expectations up while there was still significant slack in the labor market,” referring to the poor jobs numbers that have been announced recently having put on hold any chance of the Federal Reserve tightening monetary policy any time soon.
Back on the European side of the Atlantic, economic data released today showed German business morale in May hit its strongest level since May 2019, beating market forecasts, while upbeat PMI data released last Friday suggested the Eurozone, UK and US expanded all at record rates, following the relaxation of some lockdown restrictions in some countries.