EUR/USD fails to extend the previous day’s recovery from a five-year high, taking offers to refresh the intraday low around 1.0390 during early Monday morning in Europe.
The major currency pair took a U-turn from a muti-year low the previous day as the US Dollar Index (DXY) consolidated gains around a 20-year high, backed by downbeat US data and Fedspeak. However, the recent risk-aversion wave renews USD buying and weighs on the EUR/USD prices ahead of the quarterly economic forecasts from the European Commission.
Market sentiment sours after China reported downbeat figures for April month’s Retail Sales and Industrial Production, backed by conveying fresh fears over the coronavirus resurgence. That said, Shanghai City Official’s comments and weekend updates from Beijing were the major catalysts to renewing COVID-19 fears. While Shanghai City Official initially mentioned that the city's epidemic is under control, he also stated, “However the risks of rebound remain and we need to continue to stick to controls,” which in turn drowned the market’s risk appetite. On the same line was the weekend news suggesting Beijing’s guidelines to work from home for four districts, including the heavyweight Chaoyang.
Additionally challenging the previous risk-on were fears that Germany isn’t going to respect Hungary’s push for no total ban on Russia’s energy imports. Furthermore, news that the military actions in Donbas continue to accelerate underpin the risk-off mood, as well as favor the US dollar’s safe-haven demand.
Amid these plays, the S&P 500 Futures drop 0.80% even after the Wall Street benchmarks rallied the previous day. Further, the US 10-year Treasury yields struggle to extend Friday’s recovery moves as the bond coupon declines 3.6 basis points (bps) to around 2.95% by the press time.
Moving on, the Eurozone economic forecasts will be crucial amid looming fears of recession and chatters surrounding the European Central Bank’s (ECB) rate hike in July. Should the EC projections fail to comply with the market’s downbeat forecasts, the EUR/USD may have a reason to pare the latest losses, amid a lack of major directives from the US.
Read: EUR/USD Weekly Forecast: How far can the dollar go?
Failures to approach a three-week-old resistance line, near 1.0500, direct EUR/USD prices towards the south. Also acting as the key hurdle is the monthly peak of 1.0641.
Meanwhile, the 1.0350-40 support zone, comprising the recent low and the year 2017 bottom, puts a strong floor under the EUR/USD prices.
© 2000-2022. All rights reserved.
This site is managed by Teletrade D.J. Limited 20599 IBC 2012 (First Floor, First St. Vincent Bank Ltd Building, James Street, Kingstown, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at firstname.lastname@example.org.