EUR/USD pares majority of daily gains, steadies around 1.1860
- EUR/USD pair lost its momentum before reaching 1.1900.
- US Dollar Index recovers toward 92.50 during American session.
- ECB's Lagarde says second coronavirus wave will affect economy well into 2021.
After closing the previous three trading days in the positive territory, the EUR/USD pair continued to push higher and touched a fresh weekly top of 1.1894. However, the risk-off market environment in the second half of the day allowed the greenback to gather strength and caused EUR/USD to erase its gains. As of writing, the pair was up only 0.05% on the day at 1.1858.
USD's market valuation continues to drive EUR/USD's movements
Earlier in the day, the broad-based USD weakness helped EUR/USD push higher. In the absence of significant macroeconomic drivers, the US Dollar Index declined to an 8-day low of 92.26.
However, the uninspiring performance of major equity indexes in the US caused risk-off flows to provide a boost to the safe-haven USD. As of writing, the S&P 500 and the Dow Jones Industrial Average were both down around 0.4% on the day and the US Dollar Index was posting small daily losses near 92.50.
The data from the US showed on Tuesday that Retail Sales rose by 0.3% in October and missed the market expectation for an increase of 0.5%.
Meanwhile, Christine Lagarde, President of the European Central Bank, sounded pessimistic with regard to the economic outlook. "Before the vaccine news, we had pretty negative news on the second 2nd wave," Lagarde told Bloomberg and added that they expect the second wave to affect economy well into 2021.
On Wednesday, the Eurostat will release the Consumer Price Index (CPI) data for the euro area. Later in the day, Housing Starts and Building Permits data will be featured in the US economic docket.
Technical levels to watch for