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Forex News: Euro Falls On Growing U.S.-China Tensions

Euro Falls On Growing U.S.-China Tensions

05/22/2020 - 10:52:00 (RTTNews)

(RTTNews) - The euro declined against its major counterparts in the European session on Friday amid worsening mood, as U.S.-China tensions escalated and China has decided not to set an economic growth target for 2020 due to the coronavirus pandemic.

After China moved to strengthen control over Hong Kong with new security laws, U.S. President Donald Trump warned that Washington would react "very strongly" if Beijing follows through on its plans.

Critics say that the controversial law will effectively end wide-ranging freedoms including the right to peaceful assembly and free speech that Hong Kong enjoys under the "one country, two systems" mechanism.

The European Central Bank is ready to implement more stimulus in the upcoming June meeting, if it judged that the existing efforts were short of what was needed, the minutes from April 29-30 meeting showed.

Members acknowledged that the extent and duration of the coronavirus pandemic could not be foreseen and the current crisis was very different from previous crises.

In the light of the high uncertainty surrounding the economic and inflation outlook, the Governing Council stressed that it would stand ready to adjust its monetary policy stance as appropriate and also to ensure the functioning of transmission across the euro area.

The euro declined to a 3-day low of 117.03 against the yen and a 4-day low of 1.0887 against the greenback, from its early highs of 117.98 and 1.0954, respectively and held steady thereafter. The euro is seen finding support around 113.5 against the yen and 1.06 against the greenback.

The euro weakened to a 2-day low of 1.0581 against the franc from yesterday's closing value of 1.0625. Next key support for the euro is likely seen around the 1.025 level.

The euro was down at a 2-day low of 0.8940 against the pound, compared to yesterday's closing value of 0.8956. The euro is likely to face support around the 0.88 region, if it falls again.

Data from the Office for National Statistics showed that UK retail sales declined at a record pace in April as many stores were temporarily closed to contain the spread of coronavirus, or Covid-19.

The retail sales volume declined 18.1 percent on a monthly basis, which was the biggest monthly fall on record. Economists had forecast sales to decrease 16 percent after falling 5.2 percent in March.

The euro eased off to 1.5261 against the loonie, from an early more than 2-week high of 1.5323, and remained steady thereafter. The euro may face support around the 1.47 region.

The euro traded lower at a 9-day low of 1.7834 against the kiwi. The pair had finished yesterday's deals at 1.7883.

In contrast, the euro that pulled back from an early 3-day high of 1.6764 against the aussie was unable to clinch losses. The pair was trading at 1.6703, compared to yesterday's closing value of 1.6671.

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