Euro Falls on Coronavirus News and US-EU Economic Divergence

The euro today fell to new 2020 lows against the much stronger US amid a risk-off market environment dominated by headlines of new coronavirus infections. The EUR/USD currency pair’s decline was accelerated by Friday’s positive US non-farm payrolls report, which showed diverging performance between the two economies.
The EUR/USD currency pair today fell from an Asian session high of 1.0958 to a low of 1.0909 in the American session and was near these lows at the time of writing.
The currency pair attempted to rally earlier in the session, which was short-lived as the bears quickly stepped in, driving the price to new lows. The release of Italy’s industrial production data by Istat also contributed to the pair’s woes. Italy’s industrial output fell 2.7% in December, which was worse than the expected 0.4% contraction. The Sentix eurozone investor confidence report for February came in at 5.2 outperforming analysts consensus estimates set at 4.0 but was much lower than January’s 7.6 print. The lack of major European macro releases meant that the pair’s performance was mostly driven by investor sentiment.
Headlines about rising coronavirus infections and deaths dampened investors’ risk appetite, which contributed to the euro’s losses. The risk-averse market sentiment benefitted the safe-haven greenback as tracked by the US Dollar Index, which hit a high of 98.88 during the American session.
The currency pair’s future performance is likely to be affected by tomorrow’s eurozone economic growth forecasts and US dollar dynamics.
The EUR/USD currency pair was trading at 1.0914 as at 18:13 GMT having fallen from a high of 1.0958. The EUR/JPY currency pair was trading at 119.74 having dropped from a high of 120.34.

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