- EUR/USD bounces up to 1.1750 from 1.1720 lows.
- Concerns about new lockdowns in Europe hurt the euro.
- EUR/USD seen at 1.1600 in three months – Rabobank.
The euro has trimmed losses after dropping nearly 0.5% on Wednesday, to hit 1.1720 low, and has returned to the mid-range of 1.1700 during the late US session.
Euro dives on concerns of new lockdowns
The common currency has broken below the bottom of the last four days trading range, around 1.1785, with the US dollar surging across the board amid a strong risk-averse sentiment.
The growing cases of COVID-19, with Europe and the US reporting new records, has reactivated concerns about a new wave of social restrictions that might derail the fragile economic recovery. These fears have been confirmed later on when France and Germany announced second national lockdowns.
Furthermore, the uncertainty about the US presidential elections has contributed to curbing appetite for risk further. With the distance between the favourite Joe Biden and Donald Trump closing in, investors are wary that a contested election might trigger sharp price moves.
EUR/USD: seen at 1.1600 in three months – Rabobank
In a bigger picture, the FX analysis team at Rabobank sees the second coronavirus wave and fears of deflation hurting the euro in the mid-term: “While the huge liquidity facilities put in place by the Federal Reserve this year suggest that the market is unlikely to see anything like the disruption experienced in March in the foreseeable future, we do expect reduced risk appetite to translate into a covering of short USD positions. We look for EUR/USD at 1.17 on a one-month view and see risk of a dip to EUR/USD 1.16 in three-months.”
Technical levels to watch
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 rebounds to near 1.0850, awaits Fedspeak
EUR/USD is rebounding to near 1.0850 in the early European session on Friday. China's stimulus optimism and a broad US Dollar correction help the pair recover the dovish ECB decision-induced losses. All eyes remain on the Fedspeak.
GBP/USD pares UK data-led gains below 1.3050
GBP/USD is trading below 1.3050 in European trading on Friday, reversing upbeat UK Retail Sales data-led gains. The UK data failed to alter dovish BoE expectations. The downside, however, appears limited by the US Dollar pullback. Fedspeak awaited.
Gold plants flag above fresh all-time high at $2,700 on increased prospects of global easing
Gold (XAU/USD) establishes a foothold above the $2,700 psychological level on Friday after piercing through above this level on the previous day, setting yet another fresh all-time high.
Dogecoin whale activity takes a hit, will DOGE price plummet?
Dogecoin notes a drop in the count and volume of whale transactions in the last two days. On-chain data from IntoTheBlock shows that whales have likely slowed down their activity.
Canada debates whether to supersize rate cuts
A fourth consecutive Bank of Canada rate cut is expected, but the market senses it will accelerate the move towards neutral policy rates with a 50bp step change. Inflation is finally below target and unemployment is trending higher, but the economy is still growing.
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.