EUR/USD: Coordinated policy would lift the euro

EUR/USD has been on the back foot amid ECB's Lagarde's warnings of a 2008-style crisis. Fiscal stimulus headlines from the US and the eurozone are awaited in response to coronavirus, Yohay Elam from FXStreet reports.

Key quotes

“If Europe fails to act, it is facing a 2008-style crisis – European Central Bank President Christine Lagarde's words to European leaders as they try to mitigate the economic fallout from the coronavirus crisis.” 

“So far, only Italy has pledged extra spending. While Merkel has called for coordination she still refuses to change the EU's strict rules. If the leader of the continent's largest economy acts, the euro can rise.”

“If the ECB acts on its own, it would only push the euro lower. Bond markets are pricing a 10 basis point rate cut from the bank on Thursday.” 

“The lack of fiscal stimulus has also weighed on the dollar. Investors moved back to bonds and the consequent drop in yields is weighing on the dollar.” 

“Joe Biden's victory in another round of the Democratic Party's primaries has been largely ignored by markets. US inflation figures may be of interest later on.”