EUR/USD adds over 30 pips as risk assets gain ground
- EUR/USD trades at 1.1959 versus 1.1923 in early Asia.
- Coronavirus vaccine optimism and buoyant equity markets weigh over the dollar.
- Fed's Powell says the US economy remains in a damaged state.
The bid tone around the single currency strengthened on Tuesday, pushing EUR/USD higher, as stock markets gained, weakening safe-havens such as the greenback.
The pair traded near 1.1959 at the time of writing, representing a 0.30% gain on the day, having found buyers near 1.1923 in Asia.
Vaccine hopes boost risk appetite
Major Asia indices rose over 1% on prospects of a COVID-19 vaccine. Drugmaker Moderna said Monday that it will apply for the US and European emergency authorization for its COVID-19 vaccine, with full results from its late-stage study showing 94.1% effectiveness with no serious safety concerns.
Last month, drugmakers Moderna, Pfizer, and AstraZeneca announced positive results of their respective experimental vaccines, putting a strong bid under the risk assets. Since then, a massive wave of liquidity has come into equities, as noted by Reuters, weakening demand for anti-risk assets such as the US dollar.
The trend looks set to continue, as markets believe the Federal Reserve would boost stimulus to counter the recent resurgence of coronavirus. "Recent news on the vaccine front is very positive for the medium term," Powell said in testimony released Monday while adding that the economy remains in a damaged and uncertain state.
As such, the EUR/USD pair could have another go at the psychological hurdle of 1.20. The bulls failed to establish a foothold above that level on Monday on month-end dollar demand.
Data wise, the focus would be on the German labor market report and Eurozone's preliminary Consumer Price Index for November. A big beat on expectations will likely draw more substantial buying pressure for the common currency.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
