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  • EUR/USD has retreated from overnight highs near 1.0990. 
  • Optimism that the coronavirus crisis has peaked is supportive of risk assets and gains in EUR/USD.
  • On the data front, the focus is on Italy’s inflation figure and the US monthly retail sales.

The bid tone around the single currency weakened in Asia on Wednesday, allowing for a pullback in the EUR/USD pair ahead of the London open. 

The currency pair is trading near 1.0977 at press time, representing a marginal decline on the day, having hit a high of 1.0991 late Tuesday (UTC time). That level was last seen on April 1. While the pair has retreated from two-week highs, it is still sitting well above the 50-day average at 1.0964. 

The pullback may be reversed in Europe, as the overall market mood has turned somewhat pro-risk this week due to continued improvement in the coronavirus-related numbers, mainly in Europe, and better-than-expected China trade data released Tuesday. 

Further, the talk of the partial lifting of coronavirus-induced lockdown restrictions is gaining ground in some of the worst-hit countries and adding to the bid tone around the risk assets. The US stocks rallied on Tuesday, pushing the S&P 500 index higher by over 3%, while the safe-haven American dollar suffered losses across the board, as indicated by the dollar index’s 0.63% decline. The dollar index is currently sidelined near 98.90. 

The macro-environment looks supportive of gains in EUR/USD and so do technical charts, especially, Tuesday’s marubozu candle, which is indicative of strong bullish sentiment. 

As for the data calendar, Spain and Italy are set to report inflation numbers for the month of March. Across the pond, the focus will be on US Retail Sales and Industrial Production numbers for March. 

Technical levels