- Euro (EUR) heads lower Christine Lagarde expected to reaffirm dovish position
- EZ inflation expectations low
- US Dollar (USD) trades subdued on public holiday
- Still no agreement on stimulus as latest proposal by Trump rejected
The Euro US Dollar (EUR/USD) exchange rate is trading mildly lower at the start of the new week. The pair ended the previous week at US$1.1824, with gains of just shy of 1% across the week. At 07:15 UTC, EUR/USD trades -0.08% at US$1.1816 in muted trading.
The Euro is edging lower as covid concerns continue to linger. Governments are tightening local restrictions in order to attempt to stem the spread of the virus. Madrid, for example has seen travel in and out of the city banned. Cities in France have seen restrictions tighten as government’s attempt to get a grip on the surging infections rates. These tighter measures will impact economic growth and could potentially derail the fragile economic rebound.
The Euro is also under pressure ahead of a speech by European Central Bank President Christine Lagarde, who is expected to reiterate the central bank’s dovish stance. Inflation data is due later in the week; however, expectations are low as anaemic price growth in the region contrasts to the slowly improving picture in the US.
There is no high impacting Eurozone data due today leaving the Euro to be driven by sentiment. Tomorrow sees the release of German ZEW sentiment data.
The US Dollar is subdued today as the US observes a public holiday “Columbus Day”. The focus remains very much on stimulus and the chances of the US Congress approving stimulus to support the US economy sooner rather than later.
House Speaker Nancy Pelosi and Senate Republicans both rejected President Trump’s $1.8 trillion stimulus proposal. This was marginally better than the Republicans $1.6 trillion package but remains significantly short of the Democrats $2.2 trillion bill.
With no economic data to focus on the sentiment and stimulus headlines are like to drive trading.
