EUR/USD: Back below 1.11 as President Trump extends shutdown through April
- EUR/USD has fallen back below 1.11 amid risk aversion in stocks.
- Investors fear deeper economic slowdown as Trump extends social distancing to counter coronavirus outbreak.
- Goldman Sachs believes the economic fallout has only just begun.
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.
EUR/USD 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 are of the opinion 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.
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.
