The Euro is once again pushing higher versus the US Dollar on Wednesday, rebounding from a drop lower on Tuesday. The Euro versus US dollar exchange rate closed the previous session down -1.2% at US$1.1307, after trading a wide range of US$1.1275 – us$1.1425.
At 07:30 UTC, EUR/USD was rebounding +0.7% at US$1.1350 as fears over a coronavirus pandemic elevate.
Euro Paring Tuesday’s Losses
The euro is trading broadly mixed so far this week. Whilst it dropped versus the US dollar it pushed higher versus other major peers such as the pound on Tuesday
The coronavirus outbreak in Italy remains a central focus for euro investors. The number of cases has shot through 10,000 and deaths are above 500. The whole of Italy remains on lock down in a desperate bid to stem the spread of the deadly virus.
The euro has been resilient despite growing concerns over the negative impact that the outbreak in Europe will have on the eurozone’s already fragile economy. This is mainly because of the limited action that the European Central Bank are able to take. With interest rates already in negative territory, the ECB has very limited room for additional action. This is in stark contrast to the US Federal Reserve, which could still apply much deeper interest rate cuts.
There is no high impacting data today. Instead investors will look ahead to tomorrow’s ECB meeting.
US Dollar Drops As Coronavirus Fear Returns
The US dollar rebounded strongly in the previous session whilst awaiting further details on Trump’s stimulus package. However, the lack of clarity or details on any package meant optimism faded fast on Wednesday, dragging on the dollar. Instead investors were once again moving money into safe haven currencies such as the Japanese yen, the Swiss Franc and the Euro.
Investors continue to fret over the impact that coronavirus will have on businesses and consumer spending. These nerves dragged US index futures, bond yields and the dollar lower across the Asian session.
The number of coronavirus cases in the US has topped 1000 as officials call for a clamp down on large gatherings.
