Euro Retreats From Session Highs Against Dollar as France Widens Lockdown

Euro Retreats From Session Highs Against Dollar as France Widens Lockdown – The euro cut its gains against the dollar Wednesday as investors fret over fresh lockdown measures in the economic bloc that will likely slow the recovery, but some experts see a reversal on the cards for the single currency.

EUR/USD fell 0.18% to $1.1735, after hitting a high of $1.1760.

France widened lockdown restrictions nationwide to curb a third wave of coronavirus sweeping Europe. Non-essential shops and schools will be shut for three weeks.

“We will lose control if we do not move now,” French President Emmanuel Macron said Wednesday, a day after the number of Covid-19 patients in intensive care topped 5,000, exceeding the prior peak during a six-week long lockdown in the autumn of last year.

In the run up to the decision analysts had estimated that further restrictions would be inevitable given the sharp rise in cases.  

“Unfortunately, the tightening of pandemic containment measures affecting one third of the population is likely to have weighed on spending again this month. And with the number of patients with Covid-19 in intensive care now having surpassed the peak during the second wave in November, extra nationwide restrictions appear on the cards for April,” Daiwa Capital Markets said.

While the tougher restrictions will likely slow economic growth, the euro is expected to find some reprieve against the dollar if it continues to trickle lower.

“EUR/USD slid to the November 11 low at 1.1745 as expected with the mid-October low at 1.1689 being next in line. Longer term we will be looking for reversal in in the 1.1600 zone,” Commerzbank (DE:CBKG) said.

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