- EUR/USD fades Friday’s recovery moves as sentiment worsens.
- Germany needs lockdown, French doctors warn of increase in COVID-19 patients in the ICU.
- USTR hints no tariff relief for China, ECB’s Lane advises extended monetary policy easing.
- Holiday-shortened week lacks data on Monday, risk news remains as the key.
EUR/USD struggles around the intraday low of 1.1788, at 1.1791, amid the initial Asian session on Monday. In doing so, the major currency pair eases after failing to extend Friday’s upbeat performance. The reason could be traced from challenges to risk that recalled US dollar bulls during the quiet hours of trading.
COVID fears are the key…
Among the major challenges to the EUR/USD bulls, the coronavirus (COVID-19) fears are the key as the bloc is already struggling with the vaccines and a deterioration in the virus conditions at home will delay the economic recovery. That said, German Chancellor Angela Merkel recently emphasized the need for lockdown for the region’s powerhouse. The leader also signaled using Federal law if needed. On the same side, French doctors alarmed markets by communicating fresh 2021 high of covid patients in the Intensive Care Unit (ICU).
Elsewhere, US Trade Representative (USTR) Katherine Tai ruled out any changes to the American tariffs on China, for now, but didn’t refrain from fresh talks from Beijing.
It’s worth mentioning that comments from the ECB chief economist Philip Lane, published via Reuters on Saturday, suggest further economic stimulus for the bloc. The policymakers said, “The European Central Bank must remain a key stabilizer of the eurozone economy as the bloc is at risk of suffering longer-term damage from its pandemic-induced double-dip recession.”
Amid these plays, S&P 500 Futures drop 0.13% intraday despite Wall Street’s upbeat play on Friday.
Moving on, a lack of major data/events on the calendar, coupled with the pre-Good Friday celebrations in the West, which are likely to go dull due to the covid, can keep the global markets less active. However, risk catalysts should be followed for fresh impulse.
Technical analysis
Unless regaining above 200-day SMA, around 1.1875, EUR/USD becomes can keep bouncing off a downward sloping trend line from February 04, at 1.1750 by the press time.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.