- EUR / USD accelerates its reversal to hit four-week lows at 1.1655.
- A dovish ECB and fears of a new wave of lockdowns crush the euro.
- US Dollar Backed by Upbeat US GDP and Unemployment Data
The euro will go through a strong sell-off on Thursday, retreating to the mid-range of 1.1600, hit by a second wave of lockdowns in Europe and signs from the ECB of further monetary easing in December.
ECB and COVID-19 hurt the euro
The common currency has lost more than 0.7% so far today, retreating to its lowest price in the past month after European Central Bank President Christine Lagarde hinted at new monetary stimulus measures next month.
The ECB has also kept interest rates and the target of its bond purchase program unchanged. The Bank has resisted pressure to introduce new stimulus measures to support the eurozone economy affected by the coronavirus.
The president of the ECB, Lagarde, however, assured that policy makers are prepared to “recalibrate” their tools at the December meeting. These comments have been taken by the market as a sign of greater monetary stimulus and have caused the euro to fall.
Beyond that, growing coronavirus infections in Europe have forced Germany and France to introduce new lockdowns with Spain closing regional borders, increasing investor concern about the economic impact of the second wave of the pandemic.
On the macroeconomic front, the optimistic US Gross Domestic Product, which expanded at an annualized rate of 33.1% in the third quarter and the larger-than-expected decline in weekly jobless claims, has improved confidence in the economy. resilience of the US economy and offers further support to a strong US dollar.
Credits: Forex Street