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  • EUR/USD buoyant as President Trump’s health news fuels a risk reset. 
  • Trump’s coronavirus treatment suggests severe coronavirus conditions. 
  • Negative Eurozone inflation and ECB’s easing bias could cap gains. 

While risk reset is pushing EUR/USD higher on Monday, significant gains may remain elusive, courtesy of expectations for additional European Central Bank (ECB) easing. 

EUR/USD is currently trading near 1.1730, representing a 0.15% gain on the day. 

The pair picked up a bid at 1.1706 in Asia as the S&P 500 futures jumped on optimism generated by President Trump’s doctors’ comments that he could be discharged from the coronavirus hospital as soon as Monday. 

However, the decline in political uncertainty could be premature. That’s because many of the measures cited by Trump’s medical reports like fluctuating oxygen levels and a decision to begin treatment with a steroid drug are reserved for severely coronavirus patients. 

Besides, the pressure on the ECB to do more easing is mounting due to weak Eurozone inflation. As represented by the consumer price index, the cost of living in the common currency area fell deeper into the negative territory last month. 

According to Reuters, “more stimulus is increasingly likely in December. The ECB is expected then to extend and expand its 1.35 trillion-euro Pandemic Emergency Purchase Programme, used to soak up government and corporate debt to keep borrowing costs down.”

Technical levels

“The euro needs to rise above the September down trendline that begins the next week near $1.1775, and the $1.1810 (50%) retracement hurdle to lift the tone and boost confidence that a low is in place,” Marc Chandler, a Chief Strategist at Bannockburn Markets, noted in his blog Marc to Market. 

Additional levels