27.01.202011:01 Forex Analysis & Reviews: Dollar undaunted by virus

The tense situation in the world associated with the spread of coronavirus in China does not bother the US currency. Moreover, the general panic in the markets was in the hands of the greenback. According to analysts, the dollar was able to capitalize on the current situation.

The growth of the American currency became especially noticeable after the meeting of the European regulator, when the comments of Christine Lagarde, head of the ECB, crossed out the weak market expectations for normalization of rates. The agency made it clear that negative interest rates will remain the same. The current state of affairs turned out to be extremely favorable for the dollar, which did not fail to grow up. Analysts emphasized that after the publication of important statistics by the end of this week, the EUR / USD pair may rise even higher. At this time, data will be released on US GDP growth and inflation in the eurozone. According to preliminary forecasts, positive shifts and growth of up to 2.1% are expected from the American economy.

For the European currency, the situation is also forecasted with a positive sign. The level of European inflation, which is the most important indicator for the ECB, is able to maintain a single currency if it rises to 1.4%. Information on GDP growth in the eurozone is also expected this week, where according to preliminary estimates, this indicator may remain unchanged.

However, currently, the news leadership remains behind the epidemic of the Chinese coronavirus, experts emphasize. They believe that if this trend intensifies, protective assets along with the US currency will grow. The Chinese economy, by contrast, may show signs of a slowdown and further economic downturn. Note that due to the 2019-nCoV virus, the Chinese economy is suffering massive losses. In line with this, the sectors affected by tourism and passenger transportation have suffered the most.

However, experts reaffirm that the euro should not relax and at least try to beat the dollar. Greenback gained power amid the active spread of the virus, playing on the nerves of world markets, as well as due to rising stock prices. This trend continues to gain momentum, which contributes to the strengthening of the "US dollar".

At the end of last week, the EUR / USD pair showed an upward trend, rising to 1.1050. However, the market hopes for further growth did not emerge.

The pair went down sharply, permanently gaining a foothold in the downward range and had dropped to 1.1026, staying within these limits over the weekend. Morning of January 27, the pair started with a positive note, slightly rising to 1.1032. At the moment, the classic tandem runs in this range, trying to move to the tops.

Many experts agree that the US dollar is going ahead, crowding the euro, whose positions have shaken the statements of Lagarde. At the same time, the euro does not have the guts to use the situation with coronavirus to its advantage, as it turned out for the greenback. Experts fear a bias in the EUR / USD pair, but expect to maintain a balance in the short term.