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BUZZ-COMMENT-Euro may be marching towards becoming a safe haven

Credit: REUTERS/BENOIT TESSIER

Ever since the European Union agreed a stimulus plan to revive its coronavirus-hit economies [nL5N2ES23B] on July 21, the euro has been in demand, pushing it closer to becoming a safe-haven currency [nL5N2ET3AW].

August 8 (Reuters) - Ever since the European Union agreed a stimulus plan to revive its coronavirus-hit economies on July 21, the euro has been in demand, pushing it closer to becoming a safe-haven currency .

The euro's share of central-bank currency reserves reported to the International Monetary Fund was steady at 20% in the first quarter of 2020, from 20.5% in the previous three months . Second-quarter data will be eagerly awaited to establish whether the single currency's share increased.

A plot of the daily returns since the start of 2020 shows the euro versus the dollar has been much more stable than major rivals, including the safe-haven Japanese yen. USD/JPY and GBP/USD have both been much more volatile than EUR/USD. EUR/USD's utility as a shelter from the fallout due to the coronavirus pandemic has grown.

EUR/USD in July saw the biggest one-month gain in a decade to close above the 1.1596 Fibonacci level, a 50% retracement of the (2018 to 2020) 1.2556 to 1.1636 fall.

For more click on FXBUZ

2020 FX Daily Returns Chart: https://tmsnrt.rs/3kdIerr

Monthly Fibo Chart: https://tmsnrt.rs/2DkJOqQ

(Martin Miller is a Reuters market analyst. The views expressed are his own)

((martin.miller@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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