EUR/USD stays pressured towards 1.1750 on covid woes ahead of key events

EUR/USD fades bounce off intraday low, down 0.06% on a day around 1.1770, heading into Wednesday’s European session. The major currency pair refreshed a three-month low the previous day before bouncing off 1.1755.

While the recovery moves tracked Wall Street gains, mainly due to earnings optimism and hopes of further stimulus, the pair bears keep reins as the coronavirus woes intensify. Also likely challenging the EUR/USD traders could be the cautious sentiment ahead of today’s procedural voting on US President Joe Biden’s infrastructure spending bill and Thursday’s European Central Bank (ECB) meeting.

Australia’s covid conditions turn grim as the infections jump in key states like New South Wales and Victoria. On the other hand, UK’s covid cased jumped 41% between July 14 and July 20, per Reuters, whereas Kyodo News reports Tokyo’s daily covid count jumping back above 1,000 after easing the previous day.

Amid these plays, World Health Organisation (WHO) head Tedros Adhanom Ghebreyesus said, per Reuters, “The world's leading economies could bring the covid-19 pandemic under control in months.” The WHO Boss also added, “We are in the early stages of another wave of infections.”

Elsewhere, comments from US Deputy Secretary of State Wendy Sherman also weigh on the market sentiment as the diplomat flashes concerns over North Korea and China during the trilateral meet in Tokyo.

It should also be noted that the coronavirus variant fears challenge the economic recovery from the pandemic’s earlier wave and hence push the policymakers to keep the easy money flowing, which in turn backs the optimists.

Against this backdrop, US 10-year Treasury yields fade bounce off February lows but the US Dollar Index (DXY) remains firm for the fifth consecutive day near April’s top.

Looking forward, a light calendar keeps risk catalysts on the driver’s seat. Hence, any positive news from the US Senate could detail EUR/USD bearish momentum ahead of tomorrow’s ECB.

Technical analysis

EUR/USD remains pressured inside a monthly falling wedge bullish chart pattern, between 1.1825 and 1.1735, but the quote’s latest bounce off multi-day low, backed by a short-term support line and recovering Momentum signal intermediate bounces.