(27 MAY 2020)DAILY MARKET BRIEF 2:Sharp positive reversal in US dollar appetite hints at mounting stress

<p>The European Central Bank (ECB) President Christine Lagarde’s speech about the bank’s response to the Covid-19 crisis will be closely monitored by euro traders. But the latest German court investigation on the proportionality of the ECB’s massive bond purchases should dent the bank’s influence on markets, with the looming risk that the ECB could unwillingly scale down its rescue operations to support the Eurozone economy. And this is negative for the euro’s upside potential.
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<p>The EURUSD tested, but again failed to combat the solid 1.10 offers as the US dollar firmed on fading global risk appetite. The sharp reversal in daily direction could encourage a slide toward the 1.09/1.0880 area. The single currency is expected find some minor support near the 50-day moving average (1.0880), however. Also, we do not rule out the possibility of a renewed eurp rebound toward the 1.10 mark if Lagarde convinces investors that the ECB has got the right arguments to continue its monetary policy with</p>