fxs_header_sponsor_anchor

News

EUR/USD erases losses as risk tone recovers, dovish Fed expectations persist

  • EUR/USD regains poise, tracking risk recovery in stocks. 
  • Hopes for swift vaccine-led global economic recovery overshadow rising coronavirus cases. 
  • Dips remain well supported by expectations for additional Fed easing.

EUR/USD has reversed early losses, with the risk assets regaining poise despite rising odds of coronavirus-induced lockdown restrictions in major economies. 

EUR/USD bounces from 1.1850

The pair is currently trading near 1.1868, representing marginal gains on the day, having put in a low of 1.1850 during the Asian session. 

Asian stock markets got off to a negative start early Tuesday. This happened after some overnight losses on Wall Street, as investors sold risk on concerns that the US authorities would impose the economically-painful lockdown restrictions to contain the coronavirus outbreak. As such, the dollar picked up a bid and pushed EUR/USD lower. 

However, the haven demand for the dollar has weakened in the past couple of hours, with the major Asian indices such as Hong Kong's Hang Seng and the Shanghai Composite carving out gains. 

The uptick could be associated with the expectations for a coronavirus-driven swift global economic recovery in 2021 and dovish Federal Reserve (Fed) expectations. 

Investors believe the Fed would do the heavy lifting to compensate for the US Congress' inability to approve a fiscal stimulus deal. The central bank recently expressed a willingness to do more if required. 

Additional bullish pressure for the EUR could be stemming from hopes for an EU fiscal deal. On Tuesday, European Economics Commissioner Paolo Gentiloni said that he expects a positive solution to Poland and Hungary's blockage of the EU's 1.8 trillion euro ($2.14 trillion) financial package to revive the bloc's COVID-hit economy. 

The risk reset and the bearish sentiment around the dollar could keep the EUR/USD better bid in Europe. The final Eurozone Consumer Price Index for October, due at 10:00 GMT, may not have a significant impact on the euro unless the data carries a significant downward revision to the recently published preliminary forecasts. That would validate the need for additional European Central Bank easing. 

Technical levels

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.