EUR/USD: Fears about the spread of coronavirus squeeze the euro

EUR/USD is under pressure amid coronavirus concerns as COVID-19 – cases, deaths, and reopening – remains the overwhelming topic on the last day of Q2, as it did throughout the quarter, FXStreet’s analyst Yohay Elam informs.

Key quotes

“Several US states are either reimposing restrictions or halting their reopening. Going to the beach will be forbidden for those living in Los Angeles and also Miami and Texas – where hospitals are coming under immense pressure – is also shutting down bars. New Jersey is delaying indoor dining – with New York set to follow. The news is boosting the safe-haven dollar.” 

“Jerome Powell, Chairman of the Fed, has released remarks from his upcoming testimony later on Tuesday – and the focus is on the virus. Powell reiterated that a return to pre-pandemic output levels is unlikely without beating the disease and that uncertainty is high. Treasury Secretary Steven Mnuchin will appear alongside the Fed Chair and will likely address demands for further fiscal stimulus.”

“Looking to the second half of the year, investors' nightmare scenario is a clean sweep by Democrats, with Senators Bernie Sanders and Elisabeth Warren regulating Wall Street. Such fears are also supporting the dollar.” 

“Spain's GDP was confirmed at a fall of 5.2% in the first quarter, serving as a reminder of Europe's troubles. Inflation figures will probably show a bounce in June after falling beforehand. Christine Lagarde, President of the European Central Bank, reiterated her pledge to fight deflation and do whatever is needed.” 

“Coronavirus cases remain low in Europe, including when accounting for population. However, small local outbreaks can turn into larger ones if they are not dealt with on time.”