Despite pushing to a high of US$1.0768 in early trade, the Euro US Dollar exchange rate is struggling to hold onto gains as fear continues to grip the markets. US Congress failed to reach an agreement on a stimulus package and investors look ahead to eurozone consumer confidence figures.
At 08:30 UTC, EUR/USD is threatening to break through the psychological level of US$1.0700.
Eurozone Consumer Confidence Up Next
The euro fell lower in the previous week, as the number of coronavirus cases across the eurozone skyrocketed and as the number of counties adopting increasing stricter measure to contain the spread of coronavirus grows. These very measures threaten to overwhelm the response by the ECB to support the economies, making a deep recession increasingly more likely.
Last weak IFO business climate survey data and dire ZEW German economic sentiment data dragged on the euro, as coronavirus takes its toll on confidence. Today investors will look towards consumer confidence data for the bloc which is expected to show a sharp drop in morale as the spread of the virus shows no signs of letting up.
US Dollar Slips As Senate Fails To Agree Rescue Package
The US Dollar soared across the board in the previous week despite the Federal Reserve cutting interest rates to zero and announcing a $700 billion quantitative easing programme. A monetary easing package of that size should have dragged on the value of the US Dollar.
Instead the Dollar surged owing to its safe haven properties. Investors sold out of pretty much everything to move into cash. Meanwhile businesses are hoarding dollar for fear of harder times ahead. As a result, demand for the greenback soared last week and continues to advance as the new week begins.
Today the dollar is trading broadly lower versus its major peers as the US ramps up its response to the killer virus, with more cities going into lock down. Yet despite the escalating number of cases the US Congress has failed to agree on the $1 trillion economic stimulus package to shore up the US economy against the impact of coronavirus.