The EUR/USD has demonstrated a rather muted performance as the coronavirus situation continues to escalate. This was on account of the fact that investors have been treating the dollar as a safe-haven currency as the economic situation continues to worsen as economies feel the heat of the coronavirus.
Based on its performance on Wednesday, the EUR/USD appears to be reversing at around the 1.0905 resistance line and has shown quite a strong resistance level at around 1.0935. The 1.0845 price level acted as a decent support level for a while but eventually, the price broke through that support line as it made its way towards the next support level at around 1.0825.
The sideways EUR/USD price performance reflects investor response to the increasing cases of coronavirus infections. The UK announced its highest infection rate on Tuesday night and so did New York state in the U.S. This is unfortunate considering that the week kicked off with a declining infection rate, and subsequently an improved performance in the forex markets on Monday and Tuesday.
The sideways price performance in the EUR/USD currency pair may thus indicate cautious action by investors as they wait to see how things will turn out. The week has kicked off with the U.S dollar’s poor performance as higher risk currencies gained due to the seemingly improving conditions. However, The rise in the coronavirus cases has pushed investors back to safe havens thus the U.S dollar’s slight recovery and muted performance in the EUR/USD currency pair.
The performance was also influenced by the declining Euro equities. The decline was also influenced by the fact that finance ministers in the European Union failed to strike a middle ground on whether to offer more support to European economies that have been hit hard by the COVID-19 pandemic. The talks regarding further aid and more government measures were pushed to Thursday. Meanwhile, concerns continue to mount especially over the uncertainty of how long the markets will continue to bear the weight of the deteriorating economies on account of the coronavirus impact.