- EUR / USD rises above 1.1950 during the Asian session.
- Optimism over the coronavirus vaccine and buoyant stock markets weigh on the dollar.
- Powell says the US economy remains in a damaged state.
The buying tone around the common currency strengthens on Tuesday, pushing EUR / USD higher above the 1.1950 level, as stock markets rise weighing on safe-haven assets like the US dollar.
Hopes for vaccines boost appetite for risk
Asia’s major indices rise more than 1% due to prospects for a vaccine for COVID-19. Pharmaceutical Moderna said Monday that it will apply for emergency authorization in the US and Europe for its coronavirus vaccine, and the full results of its late-stage study show 94.1% effectiveness without serious safety concerns.
Last month, drug makers Moderna, Pfizer and AstraZeneca announced positive results of their respective experimental vaccines, strongly favoring risk assets. Since then, a massive wave of liquidity has entered the stocks, as Reuters notes, weakening demand for safe haven assets like the US dollar.
It appears that the trend will continue as markets believe that Federal Reserve would push stimulus to counter recent coronavirus resurgence. “The recent news on the vaccine front is very positive for the medium term,” Powell said in testimony released Monday, adding that the economy remains in a damaged and uncertain state.
EUR / USD could have another chance will overcome the psychological obstacle of 1.20. The bulls were unable to settle above that level on Monday because of month-end demand for dollars.
As for the data, the focus will be on the German labor market report and the Eurozone preliminary CPI consumer price index for November. Exceeding expectations will likely create more substantial buying pressure for the common currency.
EUR / USD technical levels