Dollar strength at the backdrop of growing concerns about the health of the global economy is the latest tailwind taking a toll on the EUR/USD pair. The EURO is on the receiving end, heading into the weak close, on the dollar strengthening to one-week highs against a basket of other currency pairs.
After rallying to two-week highs of $1.0988 in Wednesday trading session, EUR/USD is on course to end the week at one-week lows. The pair is currently flirting with key support at the 1.0820 level after coming under immense bearish pressure.
The sell-off has coincided with an uptick in demand for the dollar as investors continue to flock to safe-haven assets as economic data around the world continue to paint a gloomy picture about the world economy.
The Euro has lost 0.7% against the dollar despite the European Union agreeing to a half a trillion euro deal that will go towards supporting countries affected by the COVID-19 pandemic. Italy remains the most hit by the epidemic with its stretched public finances already under immense stress.
Weak Economic Data
The U.S economy, which until March had shown some resilience, has been crippled by the Coronavirus pandemic given the lockdowns around the country. Employment data released on Thursday showed that a record of 22 million Americans remain unemployed and in search of unemployment benefits.
Dire U.S retail and factory data also continues to raise concerns about the U.S economy. Economists are already raising the red flag that the U.S economy might already be in a recession given the contraction that took place in the first quarter.
Weak economic data has failed to have a negative impact on the strength of the U.S dollar. In contrast, the U.S dollar has continued to strengthen, having already risen to one-week highs of 100.8. The dollar strength comes at the backdrop of investors shifting their attention to safe havens as weak economic data suggest the world faces an uncertain road to recovery at the backdrop of the coronavirus fallout.