EUR/USD: Descent continues as Eurozone's top economies mull lockdown

EUR/USD continues to drop as Eurozone's biggest economies, France and Germany, consider imposing the economically-painful lockdown restrictions to counter the rising coronavirus cases. 

The pair is currently trading at 1.1778, representing a 0.13% drop on the day, having hit an eight-day low of 1.1769 early Wednesday. The currency pair is trading in the red for the third straight day, having faced rejection near 1.1860 on Monday. 

Virus concerns weigh

France is reportedly considering a one-month lockdown as the second wave of the coronavirus is showing no signs of slowing down. According to Reuters, Eurozone's economic powerhouse Germany also contemplates a measured lockdown as its health care system is close to breaking point. 

While these measures look less severe than the ones implemented in April/May, they could still harm Eurozone's already fragile economic recovery, resulting in a prolonged period of deflation. 

All things considered, the pressure on the European Central Bank to deliver more stimulus looks to be rising. As such, markets are offering euros. The sell-off will gather pace if the coronavirus numbers continue to rise. 

The US, too, is experiencing the second wave of coronavirus. However, the Federal Reserve faces less urgency to boost stimulus as inflation expectations in the US are holding up relatively well. Coupled with expectations for additional fiscal stimulus, that is likely to support gains in the US dollar. The US fiscal largesse is positive for yields and the greenback. 

Technical levels