- Demand For Safe Havens
- S China Tensions
- Germany GDP Release
The EUR/USD pair edged lower in early Monday trading session as escalating U.S-China tension sent investors scattering for safety in safe-haven assets. The U.S Dollar continued to strengthen against other major currencies, consequently sending the pair lower.
With the U.S Dollar index finding support above the $99.80 level, EUR/USD drop from one-month highs continues to gather steam. After touching highs of $1.1000 in the past week, the ERU/USD has come down tumbling as the dollar continues to strengthen as a safe haven. The pair has since tumbled to lows of 1.0887, having turned bearish in recent trading sessions.
The Euro struggling to hold above the 1.10 level against the dollar appears to have triggered bearish sentiments among traders. Euro has come under immense pressure in recent days amidst weak economic data from some of the economic powerhouse in the region. Data release from Germany and France has so far disappointed all but raising serious concerns about the health of the European Union economy.
However, it is the broader strength of the U.S Dollar that has limited EUR/USD uptrend in recent sessions. A brewing tussle between Washington and Beijing over the Chinese company’s access to U.S Technology is one of the developments that continue to escalate tensions between the two economic powerhouses.
The U.S talking tough about a proposed plan by Beijing to impose a new security law over Hong Kong has also got the two superpowers at loggerheads. Amidst the escalating tensions, investors are increasingly rushing to the U.S Dollar as a safe haven, a move that has continued sending the EUR/USD pair lower.
EUR/USD will once again be on the spot as Germany releases its GDP data. Being the fifth largest economy in the world and the biggest in the EU, the outcome will have a significant influence in the direction of the EUR/USD trades during the week. Markets are projecting a 2.2% contraction compared to a 0.4% reported in the previous quarter. A better than expected data could send the EUR/USD higher, while failure to meet estimates could see the pair weakening further.