EUR/USD trades in a narrow range ahead of the Easter break
EUR/USD has struggled to consolidate its late-March rally, with EU member states set to reopen financial aid talks on Thursday.
EUR/USD traded in a narrow band on Thursday in Asian trade, with the euro treading water at around $1.085 ahead of the London open.
The price action is consistent with recent days, where the euro has been unable to break back above $1.09: the continuation of a bearish trend lower from its recent high of $1.1148 on 27 March.
EUR/USD – what to watch out for today
After holdings its ground on Wednesday, EUR/USD briefly fell by around 50 pips towards the end of the Asian session, following news of a stalemate among EU finance leaders regarded proposed financial support measures.
Traders will be on the lookout for any further developments on Thursday, with talks set to reopen on various support measures including proposed 'Coronabonds'.
Wealthier northern states including Germany and the Netherlands remain in a standoff with fiscally ailing neighbors such as Italy about how the funding package will work.
Ahead of the European open on Thursday, EUR/USD briefly dipped after comments from European Central Bank (ECB) president Christine Lagarde, who tempered expectations around a jointly funded bond package and said 'things take time in Europe'. Her comments were published in French newspaper Le Parisien.
However, as London traders start their day, the euro is recovering ground, and a short time ago was trading back towards the $1.09 level.
Economic headwinds remain for eurozone
While EUR/USD has been prone to increased bouts of volatility in the wake of the Covid-19 pandemic, it’s currently trading at similar levels to those in the middle of February – just before the outbreak caused havoc for major Western economies.
That trading level marked part of a broader downtrend since the start of the year, after EUR/USD opened 2020 above $1.12.
And looking ahead, Lagarde said that each month European countries are forced to remain on lockdown, it’s likely to cost the eurozone another 2%-3% of GDP.
Lagarde added that the euro currency is 'stable' and she would like to see more inflation.
In an interview with BBC early on Thursday morning, Italian Prime Minister Giuseppe Conte said authorities may begin to lift some social-distancing measures 'by the end of this month'.
However, he added that the country’s national lockdown measures – which have been in force since 9 March – would only be eased gradually.
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