EUR/USD erases gains as USD sees broad-based recovery

The dour mood in the US stock futures looks to have put a bid under the US dollar, a preferred safe haven since the beginning of the coronavirus crisis. EUR/USD is now trading largely unchanged on the day near 1.1310, having printed a high of 1.1333 during the Asian trading hours. 

Other high beta currencies like the AUD, NZD, and CNH are also reporting losses against the greenback. 

Tracks risk trends

EUR/USD is closely following the action in the risk assets. The pair was solidly bid near 1.1330 early Tuesday, as the futures tied to the S&P 500 were signaling a continuation of Monday’s upbeat sentiment on Wall Street with 0.30% gains. 

However, the bid tone around the S&P 500 futures weakened after the US reported that the number of virus cases in the state of Texas rose by 8,323 on Monday. There has been a worrying rise in the number of cases in the US, the world’s largest economy, and in other countries like Australia and Spain. 

The S&P 500 futures are now reporting a 0.20% loss and could suffer deeper losses if the Chinese stock markets turn red in response to comments by China’s state media that traders need to be rational. Moreover, Monday's rally in global stock markets was primarily fueled by the surge in Chinese stocks. The Shanghai Composite Index jumped over 5.5% on Monday after the state media said the bull market is now more important than ever. 

In addition, the two-month average of the S&P 500’s put-call ratio indicates that a pullback is overdue. Apart from the broader market sentiment, EUR/USD may take cues from the German Industrial Production for May scheduled for release at 06:00 GMT. 

Technical levels