The EURUSD pair traded to the downside on Thursday, March 25 (-0.41% at 1.1762). The euro slipped on concerns over the third wave of COVID-19 across Europe and the extension of lockdowns in a number of countries until April. The single currency came under additional pressure from broad-based gains in the US dollar as players were reluctant to buy into risk-sensitive assets.

Investors have started to bet that the Eurozone recovery will lag behind that of the US due to a third wave of the pandemic amid sluggish vaccine rollout in the EU. Market participants even brushed off yesterday’s macro report showing that fewer Americans filed new jobless claims last week. Furthermore, the third estimate showed that US GDP increased 4.3% YoY in Q420. That figure came in ahead of 4.1% reported last month, but still fell short of 33.4% in Q3 by a wide margin.

Today’s macro agenda (GMT+3)

• 12:00 Germany: IFO business climate, IFO expectations, IFO current conditions (March)
• 15:30 US: personal income and personal spending (February), balance of trade (February)
• 17:00 US: Michigan consumer sentiment (March)
• 20:00 US: Baker Hughes weekly oil rig count

Current outlook

Buyers managed to hold the 1.1800 level before the North American session. After the breakout, the price action fell back to 1.1762. Weakening of the euro against the dollar resulted from a sharp decline in the EURGBP cross pair. The euro ended up on the back foot yesterday, with risk aversion firmly entrenched. Traders took profits on long positions in the cross, exerting an adverse impact on the key EURUSD pair. In the upshot, the single currency ended in the red, while sterling closed in positive territory.

After EURGBP cross dropped from 0.8641 to 0.8556 (-85 pips), an upward correction set in. Support passes through 0.8545, so another downturn can be expected before an upward correction gains ground.

Major currencies have been trading in positive territory against the US dollar. Today’s leaderboard is topped so far by the aussie (+0.48%) and the kiwi (+0.37%). Meanwhile, crosses are seeing mixed performance. At the time of writing, the euro was trading at 1.1778. Unless British and EU authorities spook markets with another bout of COVID-fear mongering, the euro will recover to 1.1800 by the close. And if the EURBGP cross extends its correction, then the euro will recover at a faster pace against the greenback.