Euro-to-Dollar Rate Wrong-footed as Turkish Lira Tumble Warns of Currency War, Questions Outlook

The Euro-to-Dollar rate tumbled Friday in moves widely attributed to rising geopolitical tensions, risk aversion and profit-taking ahead of the weekend, although losses could build next week and volatility increase if the Turkish Lira's latest tumble is indicative of another another currency war brewing. 

The Euro was edging lower from more than two-year highs Thursday as the Dollar steadied although backers of Europe's single currency are turning cautious even after Germany factories put an upgrade to second-quarter GDP on the table, with many now anticipating a correction lower. 

A strong set of Eurozone retail sales for the month of June suggest the recovery in the bloc retains a v-shaped feel, the kind of pattern that has lead investors to bid the value of the Euro higher over recent weeks.

The Euro-to-Dollar rate was higher on the day and looking to establish a foothold above 1.17 Tuesday as earlier selling of the greenback resumed following better-than-expected American manufacturing data, but ahead of an important services industry survey due on Wednesday. 

The Euro-to-Dollar rate could consolidate this week and may even see a correction over the coming days after an extended rally left it deep in overbought territory on the charts as the transatlantic coronavirus tables show signs of turning. 

The Euro-to-Dollar rate was underperforming Friday, prompting the single currency lower against most major counterparts after a volley of economic data surprised on the downside and as investors appeared to cool it on wagers against the greenback ahead of the weekend. 

The Euro's strength against a struggling U.S. Dollar looks set to extend ahead of the weekend, with the market looking to test 1.19.

The Euro was in retreat from the Dollar Thursday after Germany's Destatis revealed a larger-than-expected second-quarter economic contraction amid deepening losses in European stock markets.