The US dollar rallied sharply on Monday, lifted by safe haven flows as fears grew over rising tensions between the US and China. Both US President Trump and Secretary of State Mike Mike Pompeo have laid the blame for the Coronavirus pandemic on China.
During a Fox News virtual town hall Sunday, Trump stated: “I think they made a horrible mistake and they didn’t want to admit it. We wanted to go in. They didn’t want us there.” Mike Pompeo told ABC’s This Week there was “a significant amount of evidence” that the coronavirus came from a Chinese laboratory in Wuhan. However, he did not contradict the conclusion of US intelligence agencies that the virus was not man-made.
Research from Johns Hopkins University shows that coronavirus COVID-19 global cases have risen to 3,598,324 with 251,832 fatalities. The US could suffer as many as 3,000 deaths per day by June 1, according to documents obtained by The New York Times.On Tuesday, the euro fell after Germany’s constitutional court ruled that the European Central Bank (ECB) bond-buying program partly violates the German constitution. The court said the German government and parliament had “a duty to take active steps against” the current form of Quantitative Easing (QE). The ruling puts pressure on the ECB’s bond-buying program aimed at supporting the eurozone amid the fallout from the coronavirus pandemic. The euro slipped lower on the heels of the announcement.
Looking at the EUR/USD daily chart we can see that it has fallen sharply this week, after finding resistance at the 200-period moving average on Friday. Support lies at the prior lows in the area of 1.0775. The markets now look to the all important US employment report coming up on Friday. Analysts expect the April unemployment rate to have risen to 16% and that over 20 million jobs were lost.