EUR/USD: Dollar weakness powers gains, Eurozone PMIs eyed
- Fed's open-ended easing is weighing over the US dollar.
- EUR/USD bounced in Asia and is trading near 1.08 at press time.
- Preliminary Eurozone PMI is likely to disappoint expectations.
The anti-greenback sentiment triggered by the Federal Reserve's (Fed) open-ended asset purchase program is boding well for the single currency and helping EUR/USD gain altitude.
On the rise
EUR/USD picked up a bid near 1.0720 and rose to a session high of 1.0822 as investors offered US dollars in response to the Fed's announcement on Monday that there is no limit to their Quantitative Easing program.
Reports that the US Senate and the Trump administration were close to reaching a bipartisan agreement on the massive coronavirus spending package late Monday likely added to the bearish pressure around the dollar and put a bid under the risky assets. Asian stocks gained with the futures tied on the S&P 500 adding 4%.
The Fed's unlimited asset purchase plan could continue to ease stress in the credit markets, yielding a deeper drop in the greenback.
EUR/USD, however, may come under pressure in Europe if the Eurozone and German preliminary Manufacturing PMIs for March disappoint expectations. The data is likely to surprise on the lower side, courtesy of the coronavirus outbreak and will likely remind investors of how badly COVID-19 affects the economy, according to BK Asset Management's Kathy Lien, who sees EUR/USD falling to 1.05 over the near term.
EUR/USD is trading at 1.0803 at press time, representing a 0.7% gain on the day. The pair hit a high of 1.0822 in Asia and is largely trapped in a 1.0830-1.0735 range since March 20.