- U.S-EU Trade War
- Second Wave COVID-19 Fears
- Surging Risk Sentiments
EUR/USD retreated from one-week highs as concerns over a looming trade war between the European Union and the U.S rattled Euro sentiments. The pair also edged lower as the dollar rose unexpectedly as the threats of a second wave of coronavirus took center stage in the currency market.
The pair had been on an impressive run early in the week as a plethora of positive economic data, such as PMI, aroused hope of economic recovery following the COVID-19 disruptions. However, the bullish momentum was short-lived as the pair tumbled on Wednesday as the Euro continued to weaken.
|Technical View||Short Below 1.1249|
|Target||1.1229 next 2 targets are 1.1198 and 1.1178|
The last thing that the Eurozone needs is a trade standoff with the U.S, which explains why the EUR/USD edged lower. The U.S has threatened to hit $3.1 billion worth of EU goods with additional tariffs, all but fuelling trans-Atlantic tensions.
President Donald Trump is reportedly considering tariffs on among other things German Bear as well as French sweaters. The U.S imposing tariffs at a time when most EU companies are reeling from the effects of COVID-19 will only exacerbate the EU situation.
The uncertainty created by the surging trans-Atlantic tensions should continue to weigh Euro sentiments in the currency market. Likewise, the EUR/USD pair could continue to edge lower as the dollar tends to strengthen in times of such crisis.
The greenback is already receiving bids in the forex market as risk sentiment in the global markets continues to surge. Investors are increasingly flocking the safe-haven in the wake of reports that coronavirus infections are rising at rates last seen at the peak of the crisis in March.
The greenback strengthened against other major currencies sending the EUR/USD pair lower after the U.S reimported nearly 36,000 in new coronavirus infection, near-record tally of 36,426 reported in April.
Looking ahead, EUR/USD could experience wild swings as traders react to the European Central Bank Policy Meeting Accounts. Likewise, traders await the release of Durable Goods Orders for May in the U, S, as well as GDP Growth rate and continuing jobless claims.