EUR/USD remains heavy despite uptick in Asian stocks
- EUR/USD trades near 1.1730, having faced rejection at 1.1808 on Tuesday.
- Asian stocks rise, despite overnight losses on Wall Street.
- President Trump's call for partial stimulus fails to impress the dollar bears.
EUR/USD is looking heavy as the safe-haven dollar is showing resilience in the face of gains in the Asian stock markets.
The pair is currently trading near 1.1730, having hit a low of 1.1725 a few minutes before press time. The exchange rate fell by 0.4% on Tuesday, invalidating Monday's bullish falling channel breakout.
The pair is looking to extend Tuesday's decline even though the Asian stocks are gaining altitude. As of writing, major Asian indices like Australia's S&P/ASX 200, Hong Kong's Hang Seng, and South Korea's Kospi are up 1.14% to 0.4%. Japan's Nikkei has trimmed losses in the past hour or so.
The mild risk-on could be associated with US President Trump's call for partial stimulus. "The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now," Trump tweeted early today.
So far, however, Trump's tweet has failed to impress forex markets. That's evident from the weak tone in EUR/USD.
Currency traders seem focused on Trump's decision to abort negotiations for additional stimulus until after the election. Trump informed markets about the decision via a tweet during the North American trading hours on Tuesday, triggering risk aversion – a decline in stocks and a broad-based rally in the US dollar.
It remains to be seen if the European andUS stocks' sentiment turns positive, tracking the gains in the Asian peers. If that happens, the haven demand for the dollar would weaken, allowing a bounce in EUR/USD.
Apart from the broader market sentiment, the pair could take cues from the German Industrial Production for August, due at 06:00 GMT. The data will be followed by the European Central Bank (ECB) president Lagarde's speech at 12:10 GMT. Later in the day, the focus would shift to minutes of the Federal Reserve's (Fed) latest meeting and speech by Fed's Williams.
Technical levels