EUR/USD: The euro has reasons to rise while the dollar has no upside driver
|The euro has been benefiting from a series of positive news coming out of the old continent and by investors shrugging off concerns about Sino-American relations. Yohay Elam, an analyst at FXStreet, lays out some reasons to favor further gains.
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Key quotes
“German coronavirus cases have risen by only 0.2% and the Reproductive indicator (R) remains depressed at 0.83. Italy recorded its lowest number of deaths since March, while daily mortalities in Spain have completed a week under the 100 mark. All three countries have continued reopening the economies and are moving to reopen borders as well.”
“Investors are content with the ECB's bond-buying scheme. François Villeroy de Galhau, a member of the bank's Governing Council, described the latest program as a ‘masterpiece.’ The PEPP stands at €750 billion and many expect the Frankfurt-based institution to expand it next week.”
“Fractures are emerging in the ‘Frugal Four.’ Austria, one of the hawkish members of this club, is reportedly open to accepting some grants in the new EU recovery fund. The €500 billion strong program now seems to have higher chances of passing.”
“Beijing sees Washington's legislation to limit the listing of Chinese companies in the US as hostile. Investors may see this ‘new cold war’ as mild while both countries continue honoring the trade deal. However, it is essential to note that the mood may change.”
“Volatility is set to increase as American traders return from their long weekend. Several housing figures are on the docket, including sales of new homes, yet perhaps the most significant release is the Conference Board's Consumer Confidence measure. It is expected to bounce from April's lows.”
“Hopes for a new COVID-19 vaccine downed the greenback. Novavax, an American pharma firm, will start a human trial in Australia, with results due out in July.”
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