EUR/USD faces three headwinds

EUR/USD is on the back foot amid rising eurozone cases in Europe while growing doubts about US fiscal stimulus may further boost the safe-haven dollar. Furthermore, US retail sales may disappoint again and add to the risk-off mood, Yohay Elam, an Analyst at FXStreet, reports. 

Key quotes

“After suffering either local or moderate increases in COVID-19 cases, recent days have seen surges. Governments are trying to avoid national lockdowns and limitations to movements, but the current restrictions – and fears of new ones – already weigh on economic activity and hurt the common currency. The latest comes from Italy, where the government is also considering a curfew.”

“President Donald Trump tweeted ‘go big’ on a relief package and wants to offer more than $1.8 trillion while Senate Majority leader Mitch McConnell said a small package is enough and seems focused on the Supreme Court. Without stimulus, markets are falling and the safe-haven dollar is in demand.”

“The Retail Sales report for September is set to rock markets. Consumption is central to the world's largest economy and the lapse of several government aid programs in late July already took its toll in August. Expectations for the upcoming release are already moderate, but have they gone far enough? Another shortfall could further fuel demand for the safe-haven dollar. Later in the day, the University of Michigan's preliminary Consumer Sentiment Index is set to show a stall in the recovery.”