The EUR/USD exchange rate is one of the most watched currency pairs in the world, and its performance can have a major impact on global markets. So it’s not surprising that many people are asking: why is the EUR/USD rising?In a nutshell, it’s because economic sentiment in the eurozone has improved recently. This has led to investors buying the euro in anticipation of a stronger economic recovery in the region.

The eurozone economy has been hit hard by the coronavirus pandemic. It’s estimated that the combined gross domestic product (GDP) of the 19 countries that use the euro fell by 8.7% in 2020 compared to the previous year. But recent data suggests that the recovery is now underway.

In February 2021, the eurozone’s Purchasing Managers’ Index (PMI) rose to 53.8 from 51.7 in January. This indicates that growth in the manufacturing sector is accelerating, as businesses have been able to capitalize on the easing of lockdown restrictions across the region.

The European Central Bank (ECB) has also been proactive in supporting the recovery. It has cut interest rates to 0% and implemented a €1.85 trillion quantitative easing program to boost lending and investment.

This improved outlook for the eurozone has made the euro an attractive prospect for investors. The currency has been steadily gaining in strength against the US dollar, as the market prices in the economic recovery.

Of course, the US economy is also on the path to recovery. The US PMI hit 63.3 in February, which is the highest level since data collection began in 1997. The US economy is expected to grow at its fastest pace in over 30 years in 2021.

But the US dollar has been weak compared to its major peers, as investors have been worried about rising inflation. This has been compounded by speculation that the US Federal Reserve will start tapering its monetary stimulus soon.

All in all, the EUR/USD exchange rate has been rising in part because of increased optimism about the eurozone’s economic recovery. Investors have been buying the euro in anticipation of a stronger economic recovery in the region, which has put upward pressure on the currency pair.

However, it’s important to remember that exchange rates are a reflection of the relative strength of each currency. So if the US economy continues to improve, the US dollar could gain in strength, and the EUR/USD exchange rate could fall.

In 2021, the EUR/USD exchange rate saw a major bull run, rising from 1.19 to 1.22. This trend has continued into the start of 2022, with the rate currently sitting at around 1.22. So why has the EUR/USD been on the rise this year, and how has it been trading so far in 2022?

There are a number of factors that have contributed to the EUR/USD exchange rate’s rally in 2021, and these same factors are likely to continue to affect its trajectory in 2022. First and foremost is the strength of the Eurozone economy. The Eurozone has recovered strongly from the pandemic-induced recession of 2020, with the bloc’s economy growing by 4.3% in 2021 and forecast to expand by 4.2% in 2022. This strong economic performance has been reflected in the Eurozone’s currency, with the Euro appreciating against the US Dollar in 2021.