EUR/USD is feeling the pull of gravity on risk reset.
Coronavirus scare has eased with China’s decision to inject liquidity.
EUR/USD is losing altitude amid risk reset in the financial markets.
The currency pair faced rejection near 1.11 on Monday and is currently trading near 1.1034, representing a 0.10% drop on the day.
Global equities picked up a strong bid on Tuesday as China’s $174 billion liquidity injection eased fears about the negative effects of the coronavirus outbreak on both the Chinese and the global economy.
Notably, the S&P 500 index rose more than 1.5% and the Nasdaq Composite Index printed a record close. The US 10-year yield also rallied from 1.52% to 1.61%, strengthening the bid tone around the US dollar.
The Asian stocks also eked out solid gains on Wednesday. Also, oil benchmarks are reporting a 1 percent gain at press time.
With risk sentiment strengthening, the treasury yields are likely to extend Tuesday’s gains. EUR/USD, therefore, risks falling to 1.10. However, the downside pressures may weaken if the German PMI numbers and Eurozone Retail Sales beat expectations by a big margin.
Across the pond, ADP Employment Change (Jan) will take center stage along with the trade balance figure.
“The risk is skewed to the downside, but the pair would need to break below 1.1020 to increase its bearish potential,” according to NDDFX’s Valeria Bednarik.