EUR/USD: Coronavirus steams the euro

EUR/USD has surged to 14-month highs amid escalating coronavirus fears. Tumbling US bond yields, crashing oil prices, and further virus headlines are in focus today, according to Yohay Elam from FXStreet.

Key quotes

“Bond markets are pricing a sharp reduction of interest rates – 75 basis points – by the Federal Reserve in its scheduled meeting next week. 

“Italy will likely suffer a recession, and other countries in the eurozone will likely follow. Nevertheless, the Fed has more room to cut than the European Central Bank. The Frankfurt-based institution convenes this week and may announce a new stimulus.” 

“Investors are also worried about the spread of the disease in the US, where a lack of test kits for the respiratory illness is raising fears of a widespread outbreak.”

“The spectacular crash in oil prices is also dampening the mood and exacerbating the rush into US debt, and thus pushing euro/dollar higher.”