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Aug 03 - 05:55 AM

EUR/USD - COMMENT-Two Key Factors Can Decide Where EUR/USD Goes Next

By Richard Pace  —  Aug 03 - 04:15 AM

In a daily note to clients, Commerzbank says what's decisive for the FX market is which countries will emerge from this coronavirus crisis quickly and well.
To judge that, two factors will be decisive.

The first is coronavirus infections, already bad in the United States, that would curb economic activity.
Rising infections in Europe could also weigh on EUR strength if the situation worsens.

Second is support for fiscal policy, which both the European Central Bank, and U.S. Federal Reserve have made clear is important to the economic recovery, to which they can only provide the supportive framework.

Commerbank therefore highlights the importance of this week's ongoing negotiation between Democrats and Republicans in the United States on new economic stimulus measures, now that unemployment benefits have ended.
In the face of already poor labour market data, the longer these discussions drag on, the more painful it's likely to be for the U.S. economy and the dollar.
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