- EUR/USD dropped below 1.1700 during the American session.
- Risk aversion helped USD gather strength on Thursday.
- Brexit uncertainty and coronavius fears weigh on European currencies.
After spending the Asian session near 1.1750, the EUR/USD pair lost its traction in the second half of the day and dropped to its lowest level since September 30th at 1.1689. As of writing, the pair was consolidating its daily losses near 1.1700, losing nearly 0.4% on a daily basis.
DXY climbs higher toward 94.00 fueled by risk aversion
Heightened fears over the possibility of the rising number of coronavirus cases causing nationwide lockdowns in Europe weighed on sentiment and the risk-sensitive euro on Thursday.
France announced nightly curfews in major cities for four weeks, the UK raised its coronavirus alert level for London to ‘high’ and Germany said it is assessing additional restriction measures to limit the spread of the virus.
Meanwhile, the lack of progress in Brexit talks forced investors to seek refuge and major European equity indexes lost between 1.7% and 2.5% on the day.
On the other hand, the risk-averse market environment helped the greenback find demand as a safe-haven and allowed the bearish pressure on EUR/USD to remain intact. The US Dollar Index (DXY), which rose to a daily high of 93.90, was last seen gaining 0.45% on the day at 93.82.
On Friday, the Consumer Price Index (CPI) data from the euro area will be looked upon for fresh impetus. Although the European Central Bank (ECB) is not expected to make any changes to its monetary policy before December, a lower-than-expected reading, especially in the core CPI, could put additional weight on the euro’s shoulders.
The US economic docket will feature Industrial Production and the University of Michigan’s Consumer Sentiment Index data on Friday.
Technical levels to watch for
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