EUR/USD reverses Fed’s surprise rate cut inspired rally to 1.1200

• EUR/USD pares back gains as the US dollar recovers ground broadly.
• Fed surprised with a rate cut to zero and announced further QE.
• Eyes on virus updates, USD dynamics ahead of G7 and EU response.

With the US dollar recovery ground across its main peers from the US Federal Reserve’s (Fed) surprise rate cut led slump, EUR/USD is fading its rally to 1.1200, as the rates now trade around 1.1115, up 0.13% so far.

In a global coordinated economic response to the coronavirus outbreak, the Fed slashed the key rates to zero and announced that it will increase its bond holdings by $700 billion. Markets were caught off guard by another unexpected move by the Fed, as they started out the week early Monday.

In an immediate reaction to the Fed decision, the US dollar was broadly dumped in tandem with the US Treasury yields, as investors remain convinced the Fed's stimulus efforts will not be enough to offset the negative economic impact of the coronavirus outbreak.

The spot, subsequently, jumped 130-pips from near 1.1070 region and tested the 1.12 handle on the Fed announcement. Attention now turns to the European Union (EU) Finance Ministers’ and G7 leaders’ economic response to the virus outbreak, as they hold extraordinary meetings later on Monday.

EUR/USD technical levels to watch