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EUR/USD extends slide as bears stay in control amid tension in the EU

Downside pressure continued to extend for EUR/USD in the wake of a German court ruling concerning the legalities of the European Central Bank’s asset purchase program, which has been in place since 2015.

EUR/USD loses more support as sellers retain ascendancy

EUR/USD remains stuck in a bearish downtrend, as markets reassess the outlook for the eurozone economy.

Across global markets on Wednesday, the euro fell below $1.08 for the first time since 24 April amid renewed tensions between the European Central Bank (ECB) and Germany.

EUR/USD failed to find a catalyst in Asia on Thursday, as prices fluctuated just below $1.08

In the wake of a ruling by Germany’s constitutional court which questioned the legality of the ECB’s asset purchase program, German lawmakers pressured the ECB to provide analysis of which EU states benefited from the program, and in what proportion.

However, a number of members on the ECB’s governing council indicated the central bank will push back against the ruling, on the grounds that adherence would serve to undermine the bank’s independence.

The geopolitical tensions add to the uncertain outlook for the eurozone, as the first round of economic data for April shows the scale of the economic impact across the EU.

Despite that, in early-morning UK trade on Thursday the euro had edged back above $1.08.

Some broader risk appetite still remains in the market, as London’s FTSE index opened higher while US stock futures are pointing more than 1% higher.

EUR/USD, GBP/USD and AUD/USD all edge higher

The positive tone to Thursday’s session continued into European trade, where the STOXX Europe 600 index opened slightly higher.

Traders also digested the latest policy decision from the Bank of England (BoE), which saw GBP/USD rise back above $1.24 after four straight days of declines.

The BoE said it expected UK GDP to fall by 14% this year before rebounding by 15% next year. It also flagged additional asset purchases, forecasting that at its current pace the existing quantitative easing (QE) target will be met in July.

AUD/USD also edged higher against the US dollar as buyers regained some ascendancy and pushed the Aussie back towards its 200-hour moving average at $0.6463.

In early data out of Europe, France’s trade balance for March came in at €3.34 billion, against a deficit of €5.22 billion in February.

On the day ahead, there’s March industrial production data out of Germany while the US will release initial jobless claims and March consumer credit numbers (expected to increase). Federal Open Market Committee (FOMC) member Patrick Harker is also scheduled to give a speech discussing the US Federal Reserve’s response to the Covid-19 pandemic.

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