EUR/USD: Drops back below 1.1800 on virus woes, Sino-American tussle

EUR/USD struggles around the intraday low of 1.1788, at 1.1791, amid the initial Asian session on Monday. In doing so, the major currency pair eases after failing to extend Friday’s upbeat performance. The reason could be traced from challenges to risk that recalled US dollar bulls during the quiet hours of trading.

COVID fears are the key…

Among the major challenges to the EUR/USD bulls, the coronavirus (COVID-19) fears are the key as the bloc is already struggling with the vaccines and a deterioration in the virus conditions at home will delay the economic recovery. That said, German Chancellor Angela Merkel recently emphasized the need for lockdown for the region’s powerhouse. The leader also signaled using Federal law if needed. On the same side, French doctors alarmed markets by communicating fresh 2021 high of covid patients in the Intensive Care Unit (ICU).

Elsewhere, US Trade Representative (USTR) Katherine Tai ruled out any changes to the American tariffs on China, for now, but didn’t refrain from fresh talks from Beijing.

It’s worth mentioning that comments from the ECB chief economist Philip Lane, published via Reuters on Saturday, suggest further economic stimulus for the bloc. The policymakers said, “The European Central Bank must remain a key stabilizer of the eurozone economy as the bloc is at risk of suffering longer-term damage from its pandemic-induced double-dip recession.”

Amid these plays, S&P 500 Futures drop 0.13% intraday despite Wall Street’s upbeat play on Friday.

Moving on, a lack of major data/events on the calendar, coupled with the pre-Good Friday celebrations in the West, which are likely to go dull due to the covid, can keep the global markets less active. However, risk catalysts should be followed for fresh impulse.

Technical analysis

Unless regaining above 200-day SMA, around 1.1875, EUR/USD becomes can keep bouncing off a downward sloping trend line from February 04, at 1.1750 by the press time.