EUR/USD fails to recover and drops back under 1.1700 consolidating weekly losses
- Euro unable to hold above 1.1700 versus US dollar, turns negative.
- DXY erases losses, consolidates important weekly gains supported by risk aversion.
The EUR/USD is about to test the weekly low as stocks resume the decline in Wall Street. The resurgence of risk version boosted the US dollar across the board. The pair printed a fresh daily low at 1.1658 and is under pressure, looking at the 1.1650 zone.
The DXY bounced to the upside and is now approaching 94.00 as Wall Street indexes failed to hold to marginal gains. The Dow Jones is falling 1.74% and the Nasdaq declines 2.90%.
Risk aversion appears to be the key driver in the recent strength rally of the greenback. Also, analysts point to end of month flows as the reason for those gains. The dollar is approaching recent highs and is consolidating important weekly gains across the board.
Economic data from the US released on Friday came in better-than-expected but it did not help to offset the current tone across financial markets, dominated by precaution ahead of US presidential elections and amid increasing concerns of the impact of the coronavirus spread.
From a technical perspective, EUR/USD is moving toward the key support of 1.1650. The mentioned area is not only the weekly low but also the 20-week moving average. Below that level attention would turn to the September low near 1.1610. The negative tone continues to prevail in the short-term while on a wider perspective, is it moving sideways in a wide range between 1.16 and 1.1870.