EUR/USD drops 0.20% as France’s coronavirus infections hit record high
- EUR/USD dips as coronavirus concerns weigh over the single currency.
- France registers record single-day rise in infections while Spain announces national curfew.
- The resurgence of coronavirus could raise pressure on the ECB to boost stimulus.
EUR/USD is trading in the red, as the Eurozone's second wave of coronavirus is accelerating and threatening to slow down the already fragile economic recovery.
The pair is trading at session lows near 1.1835 at the time of writing, representing a 0.20% decline on the day. The shared currency ran into offers near 1.859 – the 61.8% Fibonacci retracement of the sell-off from 1.2014 to 1.1612 – during the early Asian trading hours. The dollar is drawing haven bids against most currencies alongside losses seen in the S&P 500 futures and oil prices.
Coronavirus infections spike
France announced a daily record of new coronavirus infections on Sunday, with the confirmed figure reaching 52,000. Italy announced a partial lockdown, which will remain in effect until Nov. 24. Meanwhile, Spain has approved a state of emergency and announced a national curfew from 11 p.m. to 6 a.m. to contain the virus.
These new restrictions, though less severe than the ones seen in the second quarter, are likely to have a negative impact on the economy. The Eurozone is already facing deflationary forces. The common currency bloc's inflation fell deeper into the negative territory in September, raising pressure on the European Central Bank to ramp up stimulus.
According to Goldman Sachs' recent forecast, the central bank is likely to boost its pandemic bond-buying program by 400 billion euros ($470 billion) in December. However, with Eurozone nations reimposing economically-painful measures to control the second wave of the coronavirus, markets may begin pricing a bigger boost in ECB's stimulus.
Hence, the path of least resistance for the EUR/USD pair appears to be on the downside. While the US, too, is facing a second wave of the coronavirus, its central bank is not under pressure to deliver immediate stimulus.
The downside move may gather pace if the forward-looking German Expectations index for October prints below estimates. The data is due today at 09:00 GMT.
EUR/USD 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.
