Situations Deteriorating Rapidly

The Euro has come under fresh selling pressure today amidst growing fears over the second wave of COVID-19. Many countries in the Eurozone are now reporting similar or higher numbers of new infections than were seen during the first wave of the virus. Many of the bloc’s most developed nations have reported worrying statistics over the last week; Spain has become the first European nation to pass more than 1 million infections while France, Germany and Italy have each hit new records in terms of daily infections numbers.

With the spread of the virus quickly spiralling out of control once again, governments in these nations are faced with a very difficult task. Most have already moved to re-instate fresh restrictions. However, with the spread of the virus continuing despite local lockdowns, curfews and travel restrictions, the question of fresh nationwide lockdowns is now once again hanging over the eurozone.

Macron Expected To Announce New Lockdown Today

In France, Emmanuel Macron will address the nation tonight and is widely expected to announce a fresh, nationwide lock-down. The president held an emergency meeting last night and is due to hold another emergency meeting today ahead of the televised, national address at 8pm. Two thirds of the country have already been placed under a night-time curfew while in Paris, bars and restaurants have been shut for weeks. However, with a record number of more than 50,000 daily infections seen over the weekend and with the death toll rising back above 500 (highest since April) the government is now expected to take stricter action.

Italy Under New Measures

In Italy, the government has recently imposed fresh restrictions in a bid to avoid a nationwide lockdown. Under the new rules announced on Sunday gyms, swimming pools, cinemas and theatres have all been closed while bars and restaurants have been ordered to shut at 5pm local time. The current measures will be in effect until November 24th. However, many regional leaders are already calling for tougher measures, warning that these restrictions are not enough.

Merkel Pushing For One Month Lockdown

In Germany, Angela Merkel is expected to push for a one month “lockdown-lite” today in a bid to protect the healthcare system and avoid the need for lockdowns over Christmas (if the virus can be brought back under control). Under the terms Merkel is expected to propose to leaders of the country’s 6 federal states today, bars and restaurants would be closed, with public events banned, while schools would be kept open.

The prospect of fresh lockdowns will be particularly challenging for the ECB given that the recovery in the eurozone was still only just in fledgling stages. In light of developments, downside risks are growing ahead of the ECB meeting this week with the bank widely expected to give a firm signal that further easing is coming ahead of 2021.

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EURUSD

From a technical viewpoint. EURUSD has been moving higher within a broad bullish channel since the wave one recovery began. However, price has recently begun to correct lower and is now trading back below the 1.1802 level. While below here, the market is vulnerable to a deeper push towards the 1.1490 level next ahead of the rising channel low beyond that.

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