The European currency was in a state of unstable equilibrium at the beginning of this week. Market participants watched where the scales tipped - in the direction of decline or growth, and this issue was decided in favor of the latter.
The growth rate of the euro against the greenback slightly accelerated on Tuesday, February 16. The catalyst for the rise in the euro was the positive economic data in the eurozone. According to Eurostat estimates, in the fourth quarter of 2020, the GDP of 19 eurozone countries decreased by 0.6% quarterly and by 5% on an annualized basis. The previous estimate implied a decline of 0.7% and 5.1%, respectively. According to the organization, in February 2021, the index of current economic conditions in the eurozone rose to -74.6 points from the previous -78.9 points recorded a month earlier. As for the index of economic expectations, it increased to 69.6 points from 58.3 points in December.
Also, the report of the Center for European Economic Research (ZEW) made a positive note. According to the agency, the index of investor confidence in the German economy suddenly increased to 71.2 points compared to 61.8 points recorded in January this year.
The current situation gave confidence to the euro. On Tuesday, the euro rate rose to 1.2157 from the previous 1.2127. At the moment, the EUR/USD pair is trading in the range of 1.2165-1.2166, trying to overcome the current levels
Earlier, investors and traders were overly pessimistic about the eurozone's economic growth prospects. However, the emergence of strong enough data forced them to reconsider their views. This had a favorable effect on the state of the market and the dynamics of the euro, providing short-term support to the single currency, experts say. The publication of positive data on the eurozone's trade balance for December 2020 added to this positive news. According to the Eurostat report, during this period, net exports increased by 27.9%. Such a high indicator neutralizes pessimism regarding the growth of the European economy, analysts are sure.
Experts draw attention to the positive dynamics noted today on the European exchange markets. The high spirits are complemented by an active interest in risky assets. The euro is also in the focus of investors' attention, and the positive sentiment is fueled by optimism about the prospects for the global economy.