EUR/USD remains heavy, unable to take off from session lows at 1.1810
|- EUR/USD remains trading near 1.1810 lows after retreating from 1.1880 area.
- The euro has dropped on risk aversion to halt a four-day rally.
- EUR/USD expected to remain between 1.15 and 1.20 – Westpac.
The euro has been one of the worst G10 performers on Thursday, dropping about 0.3% with the US dollar stronger across the board as market sentiment deteriorated. The pair has pulled back from 1.1880 highs to reach session lows at 1.1810 and remains unable to extend any recovery attempt past 1.1835.
Euro loses steam as market sentiment dampens
The common currency lost footing on Thursday, to put an end to a four-day rally as hopes of a US stimulus deal vanished. Trump crushed risk appetite after blaming the Democrats on Twitter for not willing to compromise on an acceptable agreement, which boosted demand for riskier assets. The dollar has managed to stage a solid comeback in this scenario and the US Dollar Index bounced up from seven-week lows.
Furthermore, the global spread of COVID-19 has failed to brighten the overall mood. The number of infections reached record levels in Europe with Spain becoming the first western country to register one million cases, which has contributed to undermining confidence on the common currency.
EUR/USD expects to remain within the 1.15/1.20 range – Westpac
From a wider point of view, the FX analysis team at Westpacexpects the euro to remain fairly steady despite rising COVID-19 infections: “The pandemic will remain a dominant factor for policy and regional growth. However, the huge success for this week’s first EU issuance of SURE (Support to mitigate Unemployment Risks in an Emergency) bonds, also the largest EUR sustainable bond issue, has provided support for EUR. The €17 B on offer (split of 10yr and 20yr) was oversubscribed by 14 times (over €233 B). (…) EUR may be gaining from global risk appetite as a US support package appears more likely and progress in EU/UK post-Brexit trade talks. However, EUR/USD is still likely to remain in its recent 1.15-1.20 range.”
Technical levels to watch
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