- Euro (EUR) slips back from earlier highs on fears over a second coronavirus wave
- ECB starts a review on PEPP
- US Dollar (USD) rebounds from session lows on safe haven flows
- No high impacting data is due
The Euro US Dollar (EUR/USD) exchange rate is falling lower on Monday, erasing earlier gains as risk aversion rises. The pair settled on Friday flat across the week at US$1.1837, after trading a fairly tight range. At 07:15 UTC, EUR/USD trades flat at US$1.1837, after falling sharply from session highs of US$1.1872.
The Euro fell from earlier gains as concerns over rising covid cases on the old continent is boosting risk aversion in the financial markets. As fears grow that lockdown restrictions will be tightened across parts of Europe, investors are selling out of riskier assets and favouring safe havens. European stocks are trading around 2% lower in early trade.
Nerves are showing after the World Health Organisation warned that the surge in new cases should serve as a wake-up call. Several countries across Europe have announced new covid restrictions in some of their largest cities. These new restrictions will further hinder an economic recovery which is already showing signs of running out of steam.
Meanwhile the European Central Bank has stated a review today of its pandemic bond buying programme, according to reports in the Financial Times. The central bank will look at how long it should continue the programme and whether its exceptional flexibility should be extended to older programme.
After a weaker start the US Dollar is finding its feet as investors seek out its safe haven properties.
Concerns over Congress’ failure to agree to additional fiscal stimulus ha been dragging on demand for the greenback through the Asian session. However, this is now being pushed aside as investors grow increasingly concerned about the global economic outlook amid rising covid cases.
There is no high impacting data to distract investors today. This means that sentiment will continue driving the pair until some Federal Reserve policy makers hit the airwaves later today.