GBP/USD: Dollar Drops On Dovish Fed
  • EUR/USD gives back Asian gains.
  • The US announces additional tariffs on Europe.
  • Low volume trading due to holiday mood.

EUR/USD trades at 1.2288 slightly above its intraday low of 1.2285, as the greenback tries to recover lost ground after recently touching the lowest level since April 2018. The USD’s pullback might be because of EU-US trade war fears and the spread of the new variant of the coronavirus.

The dollar index climbs back from 89.51 after its recent slide to multi-year lows and trades 0.04 Percent higher at 89.64.

The US’ second case of the mutated coronavirus was reported from California – the first one was from Colorado. The new variant is reported to be far more contagious and has worried markets.

Apart from the virus development, the US announcement of additional tariffs on the German and French products including wine, and aircraft parts, dragged the risk sentiments down.

On a positive note, the Brexit deal approval from the UK parliament, approval for coronavirus vaccines, and the chances of Joe Biden increasing the stimulus could help risk-bulls.

Also, Bundesbank President Weidmann’s comments that the second coronavirus wave might not hit economies as severe as the first one helped to arrest further downside in the EUR/USD.

But, the policymaker cautioned that the economic progress could be accurately evaluated only after looking at the infections after the removal of lockdowns.

Today’s Asia-Pacific markets trade mixed while S&P 500 Futures stay above 2,700.

At the time of writing, one Euro buys 1.2278 US dollars, down -0.11% as of 12:10 PM UTC.