- EUR / USD falls as Johnson and Johnson pause coronavirus vaccine trials.
- The increase in virus cases in the eurozone poses downside risks for the EUR.
- Key support below 1.1787 may sustain German data, due at 09:00 GMT, beating estimates.
EUR / USD is trading at session lows near 1.1795, as the dollar is gaining traction across the board on negative news about a possible Johnson and Johnson coronavirus vaccine.
The pharmaceutical giant said Monday night that it had halted all trials of its coronavirus vaccine after one participant experienced an unexplained illness.
Risk sentiment has weakened due to the reversal in the latest stage of testing a coronavirus vaccine.
S&P 500 futures are currently down 0.30% and the rally in major Asian indices has cooled off. As such, the anti-risk US dollar is gaining ground.
Furthermore, the Eurozone is facing a second wave of the coronavirus outbreak. “France reported nearly 27,000 new cases in one day this weekend. Many eurozone nations are in a similar boat with an increase in virus cases,” said Kathy Lien of BK Asset Management, adding that, “It doesn’t matter. However you look at it, the eurozone economy will be hit hard by the second wave. “
Therefore, the pair could suffer deeper declines in the short term, more so as US Treasury yields are expected to rise due to US fiscal largesse and increase the attractiveness of the dollar. .
As discussed early Tuesday, a break below Monday’s low of 1.1787 could invite stronger chart-driven selling.
However, support may be sustained if the German Zew survey current situation and economic sentiment indices for October improve estimates. Later in the day, attention would shift to the US consumer price index for September.