EUR/USD: Worrying Wednesday to boost the dollar

EUR/USD has been unable to rise, though in the last minutes the pair has surpassed the 1.13 barrier, amid uncertainty about eurozone fiscal and monetary support. US coronavirus cases tend to rise on Wednesdays, potentially dampening the mood and lifting the greenback, FXStreet’s analyst Yohay Elam reports.

Key quotes

“German Chancellor Merkel said that she expects ‘good cooperation’ with EU partners – a sign that a compromise on the EU fund has yet to be reached. Despite a Franco-German agreement on €500 billion mutually funded grants, the ‘Frugal Four’ remain opposed. The group – Austria, the Netherlands, Sweden, and Denmark – prefer loans over awarding money.”

“Tension is mounting ahead of the face-to-face leaders’ summit next week. Christine Lagarde, President of the ECB, lowered expectations of the event and ahead of the bank’s rate decision next week. She said that the ECB’s actions were effective and efficient, hinting at a pause. However, she may try pushing politicians to act.”

“It is essential to note that Texas, California, Florida, and Arizona have only recently reimposed restrictions. There is a lag of some two-three weeks before lockdown measures have any effect. The US heatwave – keeping people indoors with airconditioning – may also propagate the virus. An increase in cases, hospitalizations, and deaths – the latter seeming to bottom out – may dampen the mood and boost the safe-haven dollar.”