The US response to
curb the coronavirus outbreak seems to be causing renewed stress in the equity
markets and pushing the EUR/USD pair lower.
Rejected at 1.1145
Having turned lower
from 1.1145 in early Asia, the pair is now trading in the red near 1.1080 and
threatening to snap the six-day winning streak.
The dollar is again
rising amid the risk-off tone in the Asian stocks and the US equity index
futures. Investors are shunning risk despite China’s rate cut, possibly due to
the worsening situation in the US and President Trump’s decision to extend
social distancing through April, which could force large parts of the economy
to shut down.
Analysts at Goldman
Sachs believe that the economic fallout in the West has only just begun and
another sell-off in the stock markets could be seen. As a result, the US treasuries
(and the US dollar) could continue to draw haven demand in the near-term.
The offered tone may
further strengthen if there is a delay in the unified fiscal response from the
European Union, according to ANZ research.
The data docket is
heavy on Monday with the Eurozone
consumer and business sentiment indices scheduled for release along with the
preliminary German Consumer Price index for March. Across the pond, the focus
will be on the Pending Home Sales and the Dallas Fed Manufacturing Index.
Global equities
rallied last week, weakening the bid tone around the US dollar and helping
EUR/USD rise from 1.0636 to 1.1148, as the US Federal Reserve announced an
open-ended asset purchase program and the US Senate passed an unprecedented $2
trillion fiscal stimulus package.
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