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Original title: Many diagnosed European countries will exceed the 100,000 mark, butEUR/ USD soared towards 1.20
FX168 Financial News (North America) News On Wednesday (Oct 21), the euro / dollar rose for the fourth consecutive trading day, rebounding from a low of 1.1685 last week to a one-month high near 1.1900.
After US President Trump declared that he was ready to accept a large-scale coronavirus rescue plan, the US dollar was trading at a low of a few weeks. This fueled investor optimism, favored riskier currencies, and increased negative pressure on the US dollar. White House spokeswoman Allysa Farah (Allysa Farah) said she is optimistic about the tax deal. Trump declared that he is willing to accept the $ 2.2 trillion bill proposed by the Democratic Party. However, Trump’s position is in stark contrast to publicly expressed opposition to a large-scale bill by Senate Republicans.
However, the biggest risk Europe faces today is the epidemic, which is a historic blow to the fragile economy and banking system of the eurozone. The weakness of individual country economies (such as the Italian economy) has always been a long-term market issue, and it has also caused problems for the euro and European politics.
Spain is today the first European country to register 1 million cases of coronavirus. Most worryingly, this number has doubled in just six weeks. Just yesterday, the country reported 38,000 new cases and 575 deaths last week, bringing the official death toll from coronavirus to 34,366. On Monday, several regions of Spain have tightened restrictions on the coronavirus in a bid to contain the second wave of the epidemic. The mayor of Burgos, Daniel de la Rosa, told state television TVE: “Now we are in a situation similar to that of March or April.” He recalled that when the outbreak began, the Spanish were restricted. At home to prevent the spread of the epidemic. Earlier this month, the government declared a state of emergency in Madrid, renewing a partial blockade of millions of people in and around the capital. Health Minister Salvador Illa said Tuesday that the government is considering a nationwide curfew.
(Number of new cases per day in Spain, source: FXStreet)
At the same time, neighboring France has almost 931,000 cases and will soon surpass one million cases. It is worrying that since the end of September, the number of cases in Italy has increased considerably. The number of new cases reported yesterday was 15,199, up from more than 10,870 the day before yesterday, an increase large enough to allow the market to increase the negative bets on the economy and asset classes of the euro zone.
(The number of new cases per day in Italy, source: FXStreet)
Therefore, technically speaking, the outlook for the euro is not optimistic and the situation regarding the spread of the virus is not optimistic. This not only applies to economics, but also to European politics. Investors have been comforted by the promise of the European Central Bank to ease monetary policy and the European Union Recovery Fund. This raises hope that European politicians have finally taken a small step towards more harmonious tax arrangements.
However, the large amount of euro long data from the CFTC, coupled with the second wave of the epidemic, may have an impact on the euro. The new demand for fiscal funds may spark new debates on financial support, which may be the crux of the euro bulls. Against this backdrop, ECB officials have repeatedly expressed their dovish outlook, bracing for more monetary policy action in the coming months.
(EUR / USD daily chart, source: FXStreet)
However, Danske Bank still maintains a certain positive attitude towards the euro. In the medium term, Danske Bank’s currency analysis team noted that the EUR / USD approached 1.20 in December: “The Brexit solution, Biden’s victory and the EU budget deal may allow the EUR / USD reaches December At peak, pushing EUR / USD to 1.20, which is still our best (and basic) situation. “” We are at risk of being overly optimistic. If the situation does not improve in December, we hope to adjust for 1 to 12 months. ” The target exchange rate pattern (currently a six-month target of 1.20) has turned to support the US dollar. “
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