The EUR/USD currency pair stopped its Friday’s losing streak and rose to the fresh intra-day high above 1.1200 level, mainly due to a broad-based US dollar selling bias triggered by fresh recovery in the risk sentiment despite the rise in the coronavirus infection rate in most countries. On the other hand, the initial optimism regarding European leaders’ discussions over the €750 billion fund for coronavirus support also added strength to the shared currency and contributed to gains. EUR/USD is trading at 1.1198 and consolidating in the range between 1.1168 and 1.1207.
EUR/USD and S&P 500 futures both have started this week on a bearish note due to the renewed coronavirus concerns backed by a sharp surge in the number of cases in the US and Germany. Additionally, Australia’s decision to reimpose restrictions in its second-most populous state and extend a state of emergency until July 20 also weighed on the risk sentiment earlier.
However, the decline in the currency pair and S&P 500 futures were temporary as President Trump said that his administration would not impose a total lockdown again. The reason for the uptick in the futures could also be attributed to the fresh optimism that US President Donald Trump recently stepped back from imposing sanctions on Chinese diplomats over Xinjiang’s concerns to safeguard the trade deal. As a result, the futures are now up over 0.6%, which eventually weighed on the US dollar.
Elsewhere, the Dragon Nation recently canceled American meat imports from Tyson plant after workers tested positive for COVID-19, which turned out to be one of the key factors that kept a lid on any additional gains in the S&P 500 futures. Besides this, the risk sentiment was further soured by the ongoing geopolitical tension between North Korea and South Korea as well as the terrorist attack in the United Kingdom, which killed approximately three people, and exerted some downside pressure on the market’s risk-tone sentiment earlier. The reason for the upside in the pair could also be attributed to the initial optimism regarding the €750 billion fund report by the European leaders’ to support coronavirus hit countries, which initially boosted the shared currency.
At the coronavirus front, the number of confirmed coronavirus cases rose to 190,359, with a total of 8,885 deaths. The cases rose by 537 in Germany on the day against Sunday’s +687. Whereas, the death toll rose by three as per the German disease and epidemic control center, Robert Koch Institute (RKI) report.
Despite the intensified fears of the second wave of coronavirus and fear of restriction measures to curb the number of cases, the broad-based US dollar failed to extend its overnight gains and edged lower on the day possibly due to fresh uptick in the US stocks futures which kept the dollar prices lower and contributed to the currency pair gains. Whereas, the US Dollar Index that tracks the greenback against a basket of other currencies slipped 0.06% to 97.523 by 11:23 PM ET (4:23 AM GMT).
Daily Support and Resistance
Pivot Point 1.12
Looking forward, traders will keep their eyes on the virus and Sino-American headlines. At the data front, German Buba Monthly Report is scheduled to release during the European trading hours will be key to watch.
EUR/USD is facing substantial resistance at 1.1230 level, which is extended by the 50 periods EMA, holding mostly below the downward channel. On the downside, the support will be found around 1.1170 level, and below this, the next support at 1.1120.