EUR/USD has been struggling to recover from last week’s substantial falls. Coronavirus concerns, inflation figures and tensions ahead of the presidential debate could keep the pair down, FXStreet’s analyst Yohay Elam reports.
“One million coronavirus deaths – the world has reached that grim milestone and the focus on Europe is weighing on sentiment. That is only one of the reasons preventing EUR/USD from recovering and may bring it down to new lows.”
“Christine Lagarde, President of the European Central Bank, expressed concern about the virus and the impact on the economy. Will the Frankfurt-based institution provide more stimulus? Reportedly, that is fiercely debated and the ECB remains split between hawks and doves. The bank also has to deal with weak inflation, and new statistics published on Tuesday are adding to the case for more accommodation that may weigh on the euro.”
“COVID-19 infections remain elevated in the US as well, but the dollar’s safe-haven status means it gains from such concerns.”
“The Federal Reserve seems reluctant to provide more stimulus. Most officials, including Chairman Jerome Powell, urged the government to provide more stimulus. Vice-Chair Richard Clarida and several other officials will speak on Tuesday and are likely to continue signaling that the ball lies in elected officials’ court.”
“Some hope for a deal between Republicans and Democrats pushed stocks higher and the dollar lower – but that is beginning to fade. Lawmakers are gearing up for a battle around the nomination of a new Supreme Court Justice as the clock ticks down toward the elections – and the first presidential debate. The former Vice President is leading in the polls but is considered an underdog when it comes to debating. Will Trump close the gap with Biden? That would add uncertainty and potentially boost the safe-haven greenback as investors continue dreading the nightmare scenario of an inconclusive election and a constitutional crisis.”
Credit: FX Street