EUR / USD: Wall Street correction did not bend the euro

The European currency has performed well against the dollar (EUR / USD) in the past 24 hours despite an American session marked by its largest correction in three months.

Thursday evening, the stall of the Wall Street indices benefited during the dollar which recovered to 96.96 against a basket of currencies, with the exception of the yen and the Swiss franc. which rose to 106.57 (USD / JPY) and 0.9377 (USD / CHF) respectively.

The EUR / USD slumped to $ 1.1276 overnight after crossing the $ 1.14 mark late Thursday afternoon. But it was generally less affected than other currencies, such as the Australian and Canadian dollars, or the British pound..

For their third consecutive session of falls, and the day after the Fed’s decision, US stocks precipitated their correction on Thursday. The S&P 500 (US 500) fell 5.89%, the Russel 2000 by 7.58%, the Dow Jones (Wall Street) by 6.9% and the Nasdaq (US Tech 100) – after its three historic records in less than a week – fell 5.27%.

Volatility and fall of American markets

Against the backdrop of gains taken after the recent rally in the American indices, risk aversion has taken over on Wall Street. The rise in the number of coronavirus cases in some twenty American states, which brought the toll of infections in the country to more than two million people, struck a sharp blow to the optimism of operators, also flayed by the pessimistic remarks of Jerome Powell on the prospect of a recovery in V in the United States.

The return of uncertainty brought with it its share of volatility.. The Vix, the benchmark in this area backed by the S&P 500, passed the 40 mark after the New York Stock Exchange closed when it was trading below 27 at the start of the day.

In this context, the relative resistance of the euro can be explained by the more positive signals of the evolution of the Covid-19 within the Old Continent, but also by the monetary and budgetary responses recently brought by the euro zone. The increase in the envelope of the ECB’s asset buyback program by 600 billion euros, and the hope of a European recovery plan of 750 billion euros have strengthened the recovery of the currency to a three months high.

This morning, volatility remains high with a Vix close to 35. In Europe, the equity markets started the session at half mast before experiencing a spectacular recovery from the first half hour of session. After falling 4.71% yesterday, the CAC 40 (France 40) rebounded by the end of the morning by around 1.8% to 4,900 points. The Dax 30 (Germany 30) and the FTSE 100 recover around 1%.

On the EUR / USD side, the euro has already managed to rise above 1.13. Up 0.15%, EUR / USD is trading at $ 1.1315. The dollar index corrects by about 0.26% to 96.56.

Technically, the EUR / USD price is pending, it consolidates between its monthly R1 and R2 pivot points at 1.1240 and 1.1384, observes Valentin Aufrand, technical market analyst. ” The outlook is neutral in the short term as long as the EUR / USD moves in this range. An exit from the top would suggest a resumption of the uptrend while an exit from the bottom would suggest a bearish reversal “, He explains.

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