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  • EUR/USD drops as Johnson and Johnson pauses coronavirus vaccine trials.
  • Rising virus cases across the Eurozone pose downside risks to the EUR.
  • Key support below 1.1787 may hold of the German data, due at 09:00 GMT, beat estimates.

EUR/USD is trading at session lows near 1.1795 as the dollar is gaining ground across the board on negative news about one potential coronavirus vaccine from Johnson and Johnson.

The pharma giant said late Monday that it had paused all trials of its coronavirus vaccine after a participant experienced an unexplained illness.

The risk sentiment has weakened due to the setback in the late-stage testing of a coronavirus vaccine.

The S&P 500 futures are currently down 0.30%, and the rally in the major Asian indices has cooled. As such, the anti-risk US dollar is gaining ground.

Besides, the Eurozone is facing a second wave of the coronavirus outbreak. “France reported nearly 27,000 new cases in one day this weekend. Many Eurozone nations are in a similar boat with virus cases surging,” BK Asset Management’s Kathy Lien said, and added that, “No matter how you look at it, the Eurozone economy will be hit hard by the second wave.”

Therefore, the pair could suffer deeper declines in the near term – more so, as the US treasury yields are expected to rise on the US fiscal generosity and boost the dollar’s appeal.

As discussed early Tuesday, a break below Monday’s low of 1.1787 could invite stronger chart-driven selling.

However, the support may hold ground if the German Zew Survey’s Economic Sentiment and Current Situation indices for October better estimates. Later in the day, the focus would shift to the US Consumer Price Index for September. 

Technical levels