EUR/USD: Change in the market mood to boost the safe-haven dollar

EUR/USD has hit the highest in four weeks amid market optimism but concerns about the EU fund, US jobless claims and coronavirus cases could curb the rally, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“The increase in global stocks has pushed the safe-haven dollar down, allowing EUR/USD to reach the highest since June 11. Massive efforts to find a cure or a vaccine to COVID-19 are partly behind the most recent upswing. Equity bulls are also benefiting from the ongoing support by the Fed, which continues pumping liquidity via its bond-buying scheme. Optimism may also come from the administration’s push to reopen schools – against the advice of the Center for Disease Control.”

“America’s case count officially topped three million, with a record 59,000 daily infections reported on Wednesday. The positive test rate remains above 10% in several states – with laboratories overwhelmed in Arizona and other places. Moreover, hospitalizations are on the rise and even deaths – which were on a downtrend – began accelerating.” 

“Figures from Florida, California, Texas, and other states will be closely watched as well as an update on the labor market. Weekly jobless claims are set to hold up above one million in the week ending on July 3 while continuing claims for the previous week could also remain stubbornly high, near 20 million.”

“In the old continent, leaders have yet to agree on the EU Fund, with the clock ticking toward the first face-to-face summit next week. German Chancellor Merkel – who devised the plan with French President Macron – urged countries to seize the moment and act. The ‘Frugal Four’ are reluctant to sign off on a program that includes grants to member states they see as profligate.”