The euro is edging lower on economic pessimism; meanwhile, the rating outlook hit the Australian dollar. As focus shifts to the financial perspective, the euro drew fire. On worries about relations with European Union pound slipped. As traders try to measure impact, the virus is still a reason to worry.
On Tuesday, there was a highly watched German survey. Ahead of it, versus the dollar, the euro fell towards a three-year low. The Germany survey will most probably show a slump in investor confidence and fuel growing pessimism about the outlook for Europe’s largest economy.
On Monday, there was a United States public holiday. After it, financial markets clung to tight ranges. Investors’ focus is on developments in the coronavirus crisis and European news.
The last meeting of the central bank revived the policy prospect easing. Minutes later, among Asian currencies, the Australian dollar slipped below the 67 United States cent.
Worries about the economic impact of the coronavirus weighed on the Chinese yuan.
Data from Germany, Europe’s largest economy, showed that there were weak manufacturing and gross domestic product. Thus, sentiment for the euro has worsened dramatically this month. The data from Germany suggests that the eurozone is much more vulnerable to external shocks than previously thought.
Junichi Ishikawa is a senior foreign-exchange strategist at IG Securities in Tokyo. He said that the euro is very close to testing a critical support level at $1.08 because of the diverging economic outlook between the United States and the eurozone.
He added that it looks a little oversold, thus in the very short-term, there might be a bounce. Nevertheless, the fundamentals of the euro are still pointing more to the downside.
In Asia, the euro fell 0.12% to $1.0827. It was close to its lowest indicator since April 2017.
The single currency has lost 2.4% versus the dollar since the start of February.
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