- The EUR / USD pair lost its momentum before hitting 1.1900.
- The US dollar index recovers towards 92.50 during the American session.
- The ECB’s Lagarde says the second wave of coronavirus will hit the economy well into 2021.
After closing the previous three trading days in positive territory, the pair EUR/USD it continued to rise and hit a new weekly high of 1.1894. However, risk appetite in the second half of the day allowed the dollar to gain strength and caused the EUR / USD to erase its gains. At time of writing, the pair was up just 0.05% on the day at 1.1858.
USD market valuation continues to drive EUR / USD movements
Earlier in the day, widespread USD weakness helped EUR / USD rise. In the absence of major macroeconomic drivers, the US dollar index fell to an 8-day low of 92.26.
However, the uninspiring performance of the major stock indices in the US led to risk aversion flows providing a boost to the dollar as a safe haven. At time of writing, the S&P 500 and the Dow Jones Industrial Average are down about 0.4% on the day and the US Dollar Index posted small daily losses near 92.50.
US data showed on Tuesday that retail sales rose 0.3% in October and disappointed market expectations of a 0.5% increase.
Meanwhile, Christine Lagarde, President of the European Central Bank, was pessimistic about the economic outlook. “Before the vaccine news, we had quite negative news about the second wave,” Lagarde told Bloomberg, adding that they expect the second wave to affect the economy well into 2021.
On Wednesday, Eurostat will publish data from the euro area consumer price index (CPI). Later in the day, data on housing starts and building permits will be included in the US economic docket.
Technical levels
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