Home Forex News EUR/USD Slumps To 4-Days Lows As Traders Turn To Safe Havens

EUR/USD Slumps To 4-Days Lows As Traders Turn To Safe Havens

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  • Coronavirus Impact
  • Slowing U.S Economy
  • S Tariffs Threat

EUR/USD bounced back on Friday after coming under pressure on strong demand for the U.S dollar as a safe-haven. The dollar continues to attract bids as traders remain on edge amidst a spike in coronavirus infections that threaten a second wave of economic disruptions.

EUR/USD Selloff

The EUR/USD pair is struggling to stay above the 1.12 level after plunging below the critical support level on Thursday. Bearish momentum has gained pace in recent weeks on the pair retreating from three-month highs of 1.14.

Time                            : 06-26-2020

Pivot                           : 1.1222

Technical View           : Short Below 1.1202

Target                         : 1.1182 next 2 targets are 1.1153 and 1.1122

Comments                  : Weak Bearish

Last Price                    : 1.1224

The U.S dollar continues to strengthen across the board as a second wave of coronavirus infections threatens to plunge the economy into lockdowns. Texas has already halted the state’s reopening as hospitalizations surged to record levels.

Weak demand for goods forcing U.S employers to lay-off workers, all but paints a gloomy picture about the U.S economy. Applications for unemployment benefits continue to surge, signaling that the economy is far from recovering from the COVID-19 pandemic.

The Federal Reserve Board released stress test results for financial institutions also continues to arouse risk sentiments in the market. The report shows that 34 U.S banks could incur losses of between $560 billion and $700 billion should the economic situation deteriorate in the aftermath of COVID-19 disruptions.

Safe Haven Demand

Dovish sentiments about the U.S economy are forcing investors to scamper for safety in safe-havens, sending the U.S dollar higher against the majors such as the Euro. The Euro has also come under pressure sparking a two-day sell-off in the wake escalating trans-Atlantic tensions over trade.

The U.S warning of potential tariffs on European goods is the latest catalysts that should continue to fuel sell-off on the Euro. Tariffs coming at a time when the Eurozone economy is struggling to recover from COVID-19 disruptions would be disastrous.

The pair should experience wild swings on Friday as the European Central Bank President is scheduled for a press conference. In the U.S session, the focus will be on the Core Personal Consumption Expenditure data likely to influence the trader’s sentiments on the greenback.

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