California’s coronavirus issues outweigh Italy’s as the EUR/USD pair has been rising as the dollar slides with falling yields. Growing concerns about the disease may push the pair to new 2020 highs, according to NDDFX’s analyst Yohay Elam.
“Wall Street is down again, and the rotation of investors from stocks to bonds is weighing on the dollar, as lower yields make the dollar less attractive and imply another rate cut by the Federal Reserve.”
“The Fed is on course to continue cutting from the current 1-1.25% range while the European Central Bank is also projected to reduce borrowing costs next week, its deposit rate is at -0.50% and has limited scope to act.”
“Overall, the US is lagging behind the eurozone in both treating the disease and with monetary stimulus. The direction of travel matters more than the economic situation, which is more favorable in the US.”