- EUR / USD struggles to make a decisive move in either direction.
- The US dollar index is falling for the third day in a row.
- The optimism of the coronavirus vaccine helps the market mood remain optimistic.
The pair EUR/USD he’s having a hard time setting a short-term direction on Monday. After dipping towards 1.1800 early in the US session, the pair erased its losses and was last seen trading modest daily gains at 1.1840.
ECB comments keep the euro on the defensive
Earlier in the day, risk appetite flows began to dominate financial markets after Moderna announced that its COVID vaccine candidate showed 94.5% effectiveness in recent trials. However, the shared currency appears to be struggling to take advantage of market optimism since the European Central Bank (ECB) made it clear that it will act in December.
While speaking at an event on Monday, ECB lawmaker Pablo Hernández de Cos said currency movements between the USD and the EUR were something to worry about. De Cos further argued that monetary accommodation should be increased to avoid market fragmentation given the worsening outlook for both economic activity and inflation.
On the other hand, the dollar came under modest downward pressure in the second half of the day as the major Wall Street indices opened decisively higher and helped the EUR / USD to recover. At the moment, the S&P 500 Index is up 0.8% on the day and the US Dollar Index is down 0.1% to 92.62.
There will be no major macroeconomic data releases on the European economic agenda on Tuesday. Later in the day, US retail sales and industrial production data will be analyzed for fresh momentum. Meanwhile, investors will closely follow political developments in Europe after Hungary and Poland blocked the adoption of the European Union budget 2021-2027 which includes the recovery fund.
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