- EUR/USD is again benefitting from the broad-based weakness in the US dollar.
- Expectations of a fiscal stimulus package and the resulting risk reset are likely weighing over the dollar.
- Fed's open-ended QE has bought time, but the US Congress needs to approve the package soon.
- EUR/USD will likely drop below 1.08 if the forward-looking German data disappoints expectations.
EUR/USD moved back above 1.08 in Asia as markets offered US dollars and may challenge Tuesday's high in Europe the German IFO data better estimates.
The greenback came under pressure as the Asian stocks eked out gains, tracking the overnight rally on Wall Street, which was fueled by high expectations of US fiscal stimulus.
While Congress on Tuesday appeared closer to passing a $2 trillion stimulus package to mitigate the economic fallout from the coronavirus outbreak, it was unclear when the Democrats and Republicans would be ready to vote on the bill.
Progress is needed soon, else risk assets may suffer another selloff, boosting haven demand for the US dollar. At press time, the S&P 500 futures are reporting a 1.4% drop.
The American dollar, however, is trading in the red against majors, as indicated by the 0.3% drop in the dollar index. Federal Reserve's unlimited quantitative easing plan has reduced stress in funding markets and bought time for the politicians.
EUR/USD, however, may fall back below 1.08 if the forward-looking German IFO Expectations Index for March prints well below the expected figure of 82, bolstering recession fears. Across the pond, US Durable Goods data for February is scheduled for release.
Developments around the coronavirus outbreak and responses by governments across the globe would continue to drive the sentiment in the financial markets.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds gains above 1.0700, as key US data loom
EUR/USD holds gains above 1.0700 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.