The euro-dollar pair could not determine the vector of its movement this week. The price fluctuates between the 7th and 9th figures, demonstrating a fairly high intraday volatility. Let me remind you that last week, the EUR/USD bears were confidently pulling the pair down – within five trading days, the price overcame almost 400 points, ending trade at 1.0763. The US currency was in high demand, acting as the main protective asset, and this fact determined the direction of EUR/USD. But today, dollar bulls do not look so confident, primarily due to the decline in anti-risk sentiment. On the other hand, it is still too early to talk about a turning point in the situation – the latest news reports are quite contradictory. In view of this confusion, EUR/USD traders are clearly discouraged, so they react to events "pointwise", following the general news background.
For example, this week there were some signs of stabilization in the context of the spread of Covid-19. In particular, according to the latest data, the number of deaths from coronavirus per day is again decreasing in Italy. According to the Civil Protection Agency, the disease claimed the lives of 604 people in 24 hours. On Monday, 636 died. And most importantly, the daily increase in the number of infected people per day reached the lowest level since March 10 – 880 people. In Germany, the number of new confirmed cases of Covid-19 has also been declining for several days in a row. The Czech authorities even lifted a number of restrictions – the country's citizens were allowed to engage in non-contact sports, while opening sports grounds. Also, stores of construction materials, equipment, and bicycle maintenance services have resumed operation there (but the mask mode remains). The quarantine has not yet been eased in France, although the increase in the number of cases has slowed down – only 94 people were hospitalized with the infection during the day ( the total number of infected reached almost 100,000, while 9,000 people died).
But there is another side of the coin that indicates that the epidemic continues to progress. For example, the Spanish authorities reported a sharp increase in deaths over the past 24 hours. The country recorded 743 fatal cases and 5,000 newly infected. During the entire time of the pandemic, coronavirus infections in Spain reached 140,510 and 13,798 died. In Britain, the past day was called the darkest in the history of the country. The death rate from Covid-19 has doubled to 854 deaths per day. In total, 6,227 people died from coronavirus in the United Kingdom.
The most difficult situation is observed in the United States – over the past day, 10,534 cases of infection were registered there, and the total number reached 377,537. The United States ranks first in this sad ranking, overtaking both China and Italy. The number of victims of the coronavirus reached a record 1.7 thousand per day (this figure was the highest for all the time of observation), and the entire epidemic claimed the lives of 12.7 thousand Americans. New York city has become the epicenter of the pandemic – local authorities even decided to temporarily bury the bodies in the city park, as the morgues of hospitals are almost full. Hospitals are also packed "to the brim", in connection with which the Cathedral of St. John the Evangelist will become a hospital for the sick.
As we can see, there aren't many reasons for optimism, so it is too early to "write off" the US currency, which enjoys the status of a protective instrument. Yesterday, US President Donald Trump attacked the World Health Organization – in his opinion, WHO specialists made poor decisions in the situation with the COVID-19 (in particular, they disagreed with his decision to close the border with China to contain the spread of the virus) and sounded the alarm too late in connection with the impending threat. Trump even threatened to freeze funding for the organization, however, specifying that he will consider this issue later on.
Thus, yesterday's overall fundamental background helped dollar bulls slow down the US currency's decline throughout the market. The dollar index again crossed the 100-point border, but there was no further rally. Actually, the euro-dollar pair also only retreated from the boundaries of the ninth figure, limiting itself to a 50-point decline. Additional pressure on the euro was also exerted by the European Central Bank - yesterday, the regulator announced a number of new easing measures related to collateral (the central bank will ease collateral requirements to make it easier for banks to borrow at low rates).
But in general, the pair is now in standby mode. Traders need a powerful informational push that would allow them to move in one direction or the other. Tomorrow's online summit of EU leaders is sure to be such a boost. The euro will get an energy boost if they do agree on a package of 500 billion financial aid, not only would the pair return to the ninth figure, but also go into the Kumo cloud on the daily chart (the upper limit which corresponds to around 1,1010). Otherwise, the pair will return to the area of the seventh figure, to the support level – a two-week price low of 1.0763. Given the importance of tomorrow's event, it is now advisable to take a wait-and-see position for the pair.
