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EUR/USD spot rate at time of publication: 1.1835Bank transfer rate (indicative guide): 1.1418-1.1501FX specialist providers (indicative guide): 1.1655-1.1726More information on FX specialist rates hereThe Euro-to-Dollar exchange rate rose ahead of the weekend as markets digested the third-quarter GDP report which showed the Eurozone recovered sharply from the record-breaking slump suffered in the second quarter of the year.

GDP rose by 12.6% in the three months to the end of September, reversing much of the -12.8% decline seen in the prior quarter although statistical base effects meant that a similarity between contraction and rebound, GDP was still -4.4% below the level that prevailed in the same period one year ago.

Consensus had looked for a 12.8% rebound, a touch stronger than that reported by Eurostat on Friday, although the recovery leaves the Eurozone economy within arms reach of pre-coronavirus levels of output.

The U.S. economy was just 2.9% below pre-coronavirus levels at the end of the third-quarter, although the UK was revealed on Thursday to still be some 9.7% beneath the level observed in February 2020.

Image courtesy of Capital Economics.

Separately, Eurostat said Friday that employment increased by 0.9% in both the euro area and in the EU last quarter, leaving the number of employed persons just -2% below year-ago levels. Meanwhile, the currency supportive trade surplus grew faster than was expected in September, from €21.0bn to €24.0bn.

"Economic strife over the coming months will likely stifle the market rebound despite the impending vaccine," says Joshua Mahony, a senior analyst at IG. "The fear is that this incessant rise in US cases and deaths will ultimately force Joe Biden into a nationwide lockdown come January, with the fractured nature of the country meaning that any such restriction could be less effective than elsewhere. In Europe, we are yet to see the curve turn."

With meaningful parts of major European economies having closed again in November in response to the continent's second wave of coronavirus infections, the recovery is expected to go into reverse temporarily in the final months of the year, likely explaining why the Euro overlooked the data.

Shutdowns are expected to last only until December, although Germany already warned this week that its new restrictions could remain through winter.

Europe's single currency followed stocks higher Friday (see correlation in below graph) but the building second wave of covid-19 infections, continued lockdowns and European Central Bank (ECB) policy outlook have all been cited by analysts as factors that are likely to constrain appetite for the Euro ahead.

Above: Euro-to-Dollar rate shown at daily intervals with S&P 500 index futures (black line, left axis).

Meanwhile, with the U.S. election out of the way some American cities including New York have also begun to tighten restrictions as a winter wave of infection sweeps across the world's largest economy.

These short-term threats to the global economic recovery have offset for many investors the improved prospect of a coronavirus vaccine rollout coming sooner rather than later, with this caution having prompted a tepid bounce by the Dollar this week and retrenchment in many Euro exchange rates.

"EUR/USD found support just ahead of the key local downside retracement support (1.1725), never breaking 1.1750 - which looks like the tactical swing level of note," says John Hardy, head of FX strategy at Saxo Bank.

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She also reminded the market of the bank's concerns about a strong Euro when noting that it "may have a negative impact on the path of inflation," before reiterating that "continued policy support is therefore necessary."

"EUR's weak carry profile, December ECB policy risks, the Brexit factor and the pause in the global equity market rally are all helping to anchor EURUSD over the short-term. But the 1.1700/50 range in the pair appears to be solidifying as short-term daily support, and a 'resolution' of one or more of the aforementioned factors will ultimately mitigate the hurdles to additional upside in the pair (in our view)," says Stephen Gallo, European head of FX strategy at BMO Capital Markets. "The EUR has not been the main beneficiary of USD depreciation. Instead, that beneficiary role has been played primarily by commodity bloc currencies and local markets in Asia."

The Euro has rallied strongly in recent months and was up more than 5% for 2020 on Friday, with gains coming initially on the back what were once thought to be brighter relative economic prospects following agreement of the EU's coronavirus recovery fund, although more recently Dollar weakness has also increasingly been a factor.

Dollars were already being sold widely due to Federal Reserve (Fed) monetary policy, reduced bond yields and a rising budget deficit among other factors when Joe Biden of the opposition Democratic Partry appeared to win a majority in enough important U.S. swing states to place him on course to evict President Donald Trump from the White House on January 20 following November's election, fomenting expectations of a less confrontational U.S. trade policy, bolstered global economy and weaker Dollar.