EUR/USD pulls back from one-month high

  • EUR/USD has declined to 1.1396 from the one-month high of 1.1423 reached early Tuesday. 
  • Losses in the Chinese stock markets seem to have put a bid under the US dollar. 
  • Risk assets remain vulnerable to Sino-US tensions despite the coronavirus vaccine news.

EUR/USD has backed off from one-month highs reached during the early Asian trading hours, possibly tracking signs of nervousness in some of the Asian markets. 

The pair is currently trading marginally weaker on the day at 1.1398, having put in a high of 1.1423 early Tuesday. That level was last seen on June 10. 

The dollar seems to have picked up a bid in response to the weakness in stock markets in China and Hong Kong. As of writing, the Shanghai Composite is down nearly 1.4% on the day and Hong Kong’s Hang Seng index is down 0.5%. 

Indeed, the S&P 500 futures are still flashing green and so are other Asian indices like Japan’s Nikkei and South Korea’s Kospi. However, their upward momentum has stalled with equities in China flashing red. 

Chinese stocks are facing selling pressure, possibly due to rising Sino-US tensions. President Trump, on Tuesday, signed a bipartisan bill into law, sanctioning Chinese officials involved in undermining rights to free speech and assembly in Hong Kong. Meanwhile, China decided early Tuesday to implement retaliatory sanctions on US officials.

Looking ahead, the escalating tensions may overshadow hopes for coronavirus vaccine and push the global stock markets lower, in which case, EUR/USD may suffer deeper losses. The US stock futures picked up a bid early Tuesday on reports stating that  Moderna Inc.’s Covid-19 vaccine has produced antibodies to the coronavirus in all patients tested in an initial safety trial. 

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