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Jun 24 - 04:55 PM

EUR/USD - COMMENT-US Recap: EUR/USD Retreats As New COVID Concerns Fuel Dollar Rebound

By Paul Spirgel  —  Jun 24 - 03:00 PM

The dollar recovered some of the ground it lost recently, pushing EUR/USD down to test its 10-day moving average, as a global resurgence in COVID-19 cases led investors to take profits on recent pandemic recovery bets.

Increased U.S.-EU trade frictions nL1N2E11R5, the IMF's downgrade to its global GDP growth estimates and nagging concerns about meandering Brexit negotiations nL1N2E11T9 bolstered the tone of risk aversion.

With the S&P 500 down more than 2.6% in late U.S. trade, the dollar index was holding onto safe-haven gains of about 0.45% from Tuesday's close, while 10-year Treasury yields had slipped to 0.684%.

EUR/USD reversed recent gains, trading down 0.44% as it probed its 10-DMA at 1.1260 heading toward the U.S. close.

Despite the new set of concerns, however, the reversal of recent moves left currencies largely within recent ranges.

USD/JPY was up 0.38%, rebounding off Tuesday’s 106.08 low as the yen remained soft after earlier news that Tokyo COVID-19 cases had risen to their highest in 1-1/12 months nL1N2E11UE.

The yen has battled with the dollar for the status of leading safe haven recently, and USD/JPY found offers ahead of the 10-DMA by 107.01.
Above there, 55-and 21-DMAs would provide resistance ahead of 107.96, the 50% Fibo of June's 109.85-106.08 range.

GBP/USD fell 0.77% on the combination of concerns that new coronavirus outbreaks could hurt global growth and worries about the unsettled picture surrounding EU-UK negotiations to reach a final-status trade agreement after Brexit nL1N2E10YY.

A close below the 55-DMA at 1.2429 would open the way to the June 22 low at 1.2337.

The risk averse environment softened AUD/USD, which was on track to close below 10-DMA support by 0.6880.
Daily RSI implied short-term bearish momentum, but it was still consolidating its March-June gains, which could ultimately lead to a bullish turn.

Source:
Refinitiv IFR Research/Market Commentary

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