- EUR/USD comes back after early fall in risk-on mode.
- Recovery hopes in play amid vaccine breakthroughs.
- ECB under less pressure to ease, if data supports.
EUR/USD recovered from a low of 1.1850 – during the Asian session, and trades marginally in the green near 1.1868.
The early losses resulted from the risk-off mood due to overnight Wallstreet weakness as US authorities tightened restrictions to contain the spread of coronavirus. The market’s risk-tone benefited the US dollar.
Later recovery in the Asian indices such as Hong Kong’s Hang Seng and the Shanghai Composite weakened the dollar.
The hope that the Fed will be willing to do more weightlifting to revive the economy in the absence of any meaningful government stimulus triggered the reversal to the risk-on mood.
The chances of a global economic revival also helped the bulls.
EUR bulls are also pinning hopes on EU fiscal deal as European Economics Commissioner Paolo Gentiloni expects a solution to Poland and Hungary blockage of 1.8 trillion euro financial package to revive Europe’s economy hit by COVID-19.
EUR/USD might continue to attract bids during the European session. Unless the final Eurozone Consumer Price Index for October due today significantly falls below the preliminary forecasts, the pair might continue to hold up. If the data disappoints, the chances of further ECB easing goes up – a bearish case for EUR/USD.
At the time of writing, one Euro buys 1.1890 US dollars, up 0.24% as of 8:27 AM UTC.