EUR/USD: Euro Eases Away From $1.09 On Covid-19 Headlines

The euro is shifting lower in early trade on Wednesday, snapping a three-day winning streak versus the US dollar. The euro US dollar is moving away from US$1.09, and off recent highs, as the focus remains on coronavirus and its spread across Europe and the globe.

Italy Warns On Budget Targets Amid Coronavirus Outbreak

The euro is edging lower as coronavirus continues to spread across borders in Europe. Several European countries have announced their first coronavirus case, all of which so far appear to link back to the outbreak in Italy. Italy now has more than 300 cases and there have been 11 deaths.

Italy has warned the EU on budget targets amid the rising number of coronavirus cases. Italy warned that if the outbreak in Italy’s northern industrial regions has a prolonged impact on the economy the EU should offer flexibility on targets. Italy’s economy is already on the cusp of recession. The regions of Lombardy and Veneto are most affected by the outbreak and are also responsible for a third of output for the eurozone’s third largest economy. As the number of cases increase, workers told to stay at home, travel restrictions and lock downs persist the potential economic impact grows.

There is no high impacting eurozone data due for release today. Investors will look towards speeches from European Central Bank Officials. Any comments surrounding coronavirus will be closely monitored.

Dollar Volatility on CDC Warning

The dollar is moving slowly higher on Wednesday, after selling off in the previous session following a warning from Federal health authorities over coronavirus. Authorities expect a wider spread of coronavirus in the US.

Nancy Messonnier, the director of National Centre for Immunization and Respiratory Diseases at the Centres for Disease Control and Prevention (CDC) said in a news briefing that the CDC expect a rise in the number of cases and that the US should prepare itself.

US stocks plummeted following her remarks, closing 3% lower for a second straight day. The dollar also fell as investors attempted to gauge the economic hit that coronavirus could have on the US economy and the odds of an interest rate cut by the Federal Reserve on the back of any slowdown. The dollar is recovering in early trade today thanks to its safe haven properties.

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