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Forex Market: EUR/USD hovers above one-week low on China COVID case surge, global growth concerns

EUR/USD hovered just above a fresh one-week low on Monday, as market sentiment was dampened by a surge in new COVID-19 infections in China and tighter restrictions in some cities there, while bolstering safe haven demand.

Two deaths were reported in the capital city of Beijing on November 20th, while residents of the city’s most populous district were urged to remain at home on Monday.

These developments have dampened hopes of an early easing of stringent pandemic-related restrictions that have hampered economic growth.

“The outlook for China’s zero-COVID market will remain a key source of volatility,” Carol Kong, a currency strategist at Commonwealth Bank of Australia, was quoted as saying by Reuters.

“If we do see another set of step up in restrictions, it indicates to me that the Chinese officials are still wary of any eventual reopening,” Kong added.

Safe haven buying drove the US Dollar Index up to highs unseen since November 11th on Monday, with the DXY last up 0.62% to 107.635.

The greenback has recouped some of the sharp losses it registered earlier this month, when a cooler than expected inflation data print for October spurred investor hopes Fed rate hikes could slow down.

Market players are now expecting the minutes from the Federal Reserve’s policy meeting in November, due out on Wednesday, for any hints on how high interest rates may ultimately go.

Meanwhile, the common currency sharply retreated on concerns that global economic growth could slow further in 2023 after a year marked by the war in Ukraine and persistently high inflation.

As of 9:49 GMT on Monday EUR/USD was losing 0.88% to trade at 1.0232. Earlier in the European trading session, the major Forex pair slipped as low as 1.0226, which has been its weakest level since November 11th (1.0163).

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 1.0344
R1 – 1.0375
R2 – 1.0427
R3 – 1.0457
R4 – 1.0488

S1 – 1.0292
S2 – 1.0262
S3 – 1.0210
S4 – 1.0158 is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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