- COVID-19 continues to spread, intensifying fears of deeper economic contraction.
- Dollar draws haven bids, keeping EUR/USD under pressure.
- The US initial jobless claims data may bolster risk-off.
The American dollar is drawing bids for the fourth straight day, keeping EUR/USD on the defensive below 1.0950. The currency pair has erased more than 40 percent of the recent rise from 1.0636 to 1.1148 seen in the five trading days to March 27.
The dollar is pushing higher on lingering concerns that coronavirus outbreak, which is showing no signs of slowing down, will lead to a prolonged global economic recession. These fears kept the US stocks under pressure on Wednesday.
Wall Street dived 4% as President Trump warned America to brace for painful two weeks. Meanwhile, the White House projected that the coronavirus pandemic could claim 100,000 to 240,000 lives, even if social distancing guidelines are maintained.
Asian stocks followed suit and registered notable losses in early trade on Thursday. The risk-off sentiment, however, appears to have weakened at press time. Stocks in China, Hong Kong, and South Korea are now reporting gains alongside a 1.4 percent rise in the S&P 500 futures. If the European stocks open on a positive note, the downside move seen in EUR/USD may stall.
Focus on US initial jobless claims
Morgan Stanley analysts expect the official data, due at 12:30 GMT, to show the number of people filing first-time claims for state unemployment insurance exceeded 4.45 million in the week ended March 27 versus preceding week's figure of 3.283 million.
Risk-off will likely worsen, adding to bearish pressures around EUR/USD if the jobless claims blow past expectations. Apart from the weekly employment data, the pair could take cues from the US trade balance and factory orders, also scheduled for release during the North American trading hours. The European data calendar is light with just Eurozone Producer Price Index, due for release at 09:00 GMT.
Technical levels
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