EUR/USD: More reasons to worry than cheer

EUR/USD has been edging lower as there are more reasons to worry than cheer such as an increase in US coronavirus cases and Fed Chair Powell's caution, potentially weighing on the pair, FXStreet’s analyst Yohay Elam informs.

Key quotes

“US Retail Sales smashed all expectations with a surge of 17.7% in May – more than double the estimates and painting a V-shape when only observing consumption data for April and May. America goes on a shopping spree that encourages the whole world and weighs on the safe-haven dollar.”

“Dexamethasone – a cheap and commonly available steroid has proved effective in reducing coronavirus deaths in a wide, randomized controlled trial conducted by the University of Oxford. A drop of up to a third in mortalities among severely sick patients is encouraging for the whole world.” 

“Hospitalizations and infections are rising at an accelerating pace in the US Sun Belt. Apart from large Florida and Texas, hot Arizona is also struggling. Moreover, cases have increased in Oklahoma, where President Donald Trump is set to hold a 20,000-strong indoor rally on Saturday. Local authorities have pleaded him to cancel or change the nature of the event.”

“Robert Kaplan, the President of the Dallas branch of the Fed, stressed that the next steps of the economic recovery depend on successfully executing a health strategy, rather than more fiscal and monetary stimulus. His boss, Fed Chairman Jerome Powell, also said that a full recovery depends on curbing the disease and refused to get carried away by optimism coming from consumption data.”

“The dollar may find more demand as geopolitical tensions remain elevated. China is clashing with India. A brawl between soldiers at the remote Himalayan Galwan valley has taken the lives of dozens while tensions on the Korean peninsula seem far from calming down.”