The dollar remains under the selling pressure on Wednesday, as risk sentiment continues to improve after huge supportive measures were announced by the US authorities. The greenback lacks the safe-haven demand and has been losing ground against most counterparts this week.
Against this backdrop, the euro retains its bullish bias and has settled above 1.08 after a brief dip early in the day. However, EURUSD still refrains from testing the 1.09 figure after Germany’s disease and epidemic control center said that it’s just the beginning of an epidemic.
Furthermore, according to the latest IFO survey, the final business climate index arrived at 86.1 in March versus 87.7 in the preliminary report. Also, the German IFO economist said that there the country’s economy could contract by 5-20% this year depending on the length of a shutdown. Amid these warnings, it’s not surprising that the single currency remains below the 1.0850 region despite a weaker dollar. Once above 1.0890, the euro may retarget the 50-DMA around 1.10 but the upside momentum will likely remain limited for the time being.
Meanwhile, cable has settled comfortably above 1.19 and is already nearing the 1.20 handle, having registered one-week highs around 1.1970. the pair continues to gain traction due to a retreat in the greenback after the Fed’s unprecedented QE program to buy unlimited amounts of Treasury bonds and mortgage-backed securities. The economic data out of the UK showed that the headline CPI eased to 1.7% YoY rate last month, but the release did little to affect the short-term dynamics in the pair.
As for USDJPY, the pair continues to struggle in the 111.50-111.70 region for a fourth consecutive day on Wednesday despite the lack of safe-haven demand for the Japanese yen. At the same time, there are strong support levels on the downside in the form of the key moving averages. As such, the pair will likely continue to change hands close to the current levels. The longer the dollar refrains from challenging the above-mentioned resistance, the stronger downside risks are getting though.