EUR/USD retreats further to the 1.0750 area
- EUR/USD fails to holds to most gains, the correction might be over.
- Wall Street consolidates most gains; US President Trump wants country open by Easter.
The EUR/USD dropped further and printed a fresh session low at 1.0748. From the daily high it has retreated 130 pips after the US dollar managed to stabilize and on the back of a weaker euro.
Wall Street rebounds on stimulus hopes
US stocks are rising sharply on Tuesday as volatility remains at extreme levels. The Dow Jones was up by more than 7% and the Nasdaq 5.5%. Expectations that lawmakers would reach a deal on an economic package helped financial markets. In an interview with Fox News, US President Trump said he wants the US open by easter. “We can socially distance ourselves and go to work.”
The DXY remains on corrective mode, but it trimmed losses during the American session. It was falling 0.47%, hovering around 102.00, about to post the third decline in a row. A weaker greenback initially boosted EUR/USD to 1.0888, the highest level since last Thursday.
Economic data shows evidence of a steep recession ahead
The preliminary March PMI report showed a sharp contraction in economic activity. In the EZ the service sector recorded the most significant drop on record. “The March PMI points to a growth contraction of around 2% q/q. With many government containment measures stepped up in the past few days (e.g. in Germany and Italy) and production closures in industry and the important car sector only just starting to bite, further PMI declines in coming months seem likely to us”, explained Danske Bank analysts.
At Wells Fargo, economists point out the outlook suggests the euro should remain relatively subdued in the near term. “We see little reason to expect meaningful gains in the EUR/USD exchange rate for the time being.”
The new economic reality in the Eurozone starts to weigh on the euro. On Tuesday, the currency failed to hold to gains versus the greenback, and it was also down versus the pound.
EUR/USD Technical levels