On Wednesday, the EURUSD pair lost over 100 pips and dropped to the area of March 26 lows at 1.0917. The major opened the day in the green zone above the key 1.10 psychological mark but then lost its traction amid risk-off and declined.
The US Dollar keeps its bullish bias intact and trades with gains in the mid-99.00 area as markets maintain cautious sentiment and continue to watch the pessimistic coronavirus headlines. Today, Spain joined the list of the most affected countries. The number of new cases there exceeded 100,000 people while the death toll climbed to 864 and hit a new record low. Italy has about 105,792 patients. On Tuesday, the virus took the lives of 837 people raising the overall death toll to 12,428. And though there are hopes that the pandemic spread across the country slowed down a bit, Italian health minister Roberto Speranza confirmed that the lockdown would be extended until 13 April.
Amid these headlines and rather deplorable statistics across the Atlantic – the US still leads the world as the number of infections there exceeded 188,000 while the death toll surged to over 4,000 – investors prefer safe-havens. Thus, the USD benefits from the situation dragging the pair down.
Moreover, today’s EZ final PMI for March showed that output, new orders, and purchasing all witnessed a sharp decline amid disruptions in global supply chains due to the epidemic outbreak. The manufacturing sector took a heavy blow amid the virus spread and strict lockdown measures while the negative impact is far from being over. At the same time, Eurozone’s jobless rate dropped to a 12-year low in February (7.3% versus 7.4% prior). However, that was before the restrictions that halted the activities of many companies. Thus, figures in March may worsen. All this also weighed on the shared currency and strengthened bears’ positions on the market.
On Friday, the US will publish its ‘all-important’ Nonfarm Payrolls that may somehow influence the major’s dynamics however traders will likely keep on taking cues from COVID-19 headlines.
From the technical point of view, the EURUSD pair remains under pressure but still holds above its SMA200 (today at 1.0890) on the 1-hour chart. The sellers are dominant for the time being but risk sentiment will continue to determine the major’s next moves. If risk-on returns to markets again, EURUSD may resume its rally. The support is at 1.0925, 1.0875 and 1.0785 while the resistance is seen at 1.1095, 1.1145 and 1.1185.