- EUR/USD accelerates its reversal to hit four-week lows at 1.1655.
- A dovish ECB and fears of a new wave of lockdowns crush the euro.
- US dollar supported by upbeat US GDP and unemployment data.
The euro is going through a sharp sell-off on Thursday, retreating to the mid-range od 1.1600, hammered by a second wave of lockdowns in Europe and ECB’s hints to further monetary easing in December.
ECB and COVID-19 hurt the euro
The common currency has lost more than 0.7% so far today retreating to its lowest price in the last month after the European Central Bank’s President, Christine Lagarde hinted to further monetary stimulus measures next month.
The ECB has kept interest rates as well and the target of its bonds buying program unchanged. The Bank has resisted pressures to introduce fresh stimulus measures to support the coronavirus-stricken Eurozone economy.
ECB President Lagarde, however, assured that policymakers are prepared to “recalibrate” their tools at December’s meeting. These comments have been assumed by the market as a signal of further monetary stimulus and sent the euro tumbling.
Beyond that, the surging coronavirus infections in Europe have forced Germany and France to introduce new of lockdowns with Spain closing regional borders, increasing investors’ concerns about the economic impact of the second wave of the pandemic.
On the macroeconomic front, the upbeat US Gross Domestic Product, which expanded at a 33.1% annualized pace in the third quarter and the larger than expected decline on weekly jobless claims has improved confidence on the resilience of US economy and offering further support to an already strong US dollar.
Technical levels to watch
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