The Euro is now facing its 4th straight day of losses against the US dollar as the market flocks to the greenback as a safe haven currency on the back rising coronavirus cases and accusations by the US against China related to a hacking scandal.
In what was shown as move of solidarity, The Biden administration and other Western allies blamed China yesterday for hacking into the Microsoft email exchange servers as well as a range of other cybercriminal operations.
This is a huge escalation between China and other world superpowers which caused the US stock markets to tumble and threatens to derail the fragile economic recovery currently underway worldwide.
During the start of the European trading session today we have seen the release of the producer price index which came in at 1.3% against analysts’ expectations for a number of 1.2% and may go some way to supporting the Euro from heavier further losses.
The EUR/USD bulls once again defended the critical support level of $1.1775 and after briefly breaking down through this level, the Euro ended the day towards the higher end of the spectrum.
With no major economic news release due out from the Eurozone or the US until Thursday which is when we will see the release of the ECB’s latest interest rate decision, the EUR/USD currency pair will be driven by coronavirus concerns and the hacking scandal between the west and China.
Any serious escalation in either of these matters is bad news for the Euro and we may see a retreat down to the $1.1711 support level and a break of this will mark a more than 8 month low for the European currency.