EUR/USD: the new wave of coronavirus puts pressure on the euro
Current trend
This week, the EUR/USD pair is correcting downwards and is currently trading at the level of 1.1230. The euro is under pressure from a new wave of coronavirus, which forces the authorities to impose new serious quarantine restrictions. The Austrian government has announced a complete internal isolation; similar measures are also being discussed in Germany. Outgoing Chancellor Angela Merkel insists on introducing a two-week quarantine in the country, but the new government, led by Olaf Scholz, has so far abandoned this step, although the epidemic situation in Germany is rapidly deteriorating. In general, the threat of tougher quarantine measures scares investors, as it could put pressure on consumer demand and the service sector and slow down the recovery of the European economy.
The American currency looks more stable as the market expects the US Fed to introduce new measures to reduce stimulus. Based on the published minutes of the November meeting of the regulator, we can say that the officials are ready to accelerate the pace of reducing bond purchases or raise interest rates if inflation continues to rise. According to the latest data, the state of the American labor market is improving, which is the second reason for the likely hike in rates. Last week, the number of initial applications for unemployment benefits fell again to 199K, and the total number of citizens receiving benefits dropped to 2.049M. However, high inflation is contributing to a slowdown in economic growth, which in Q3 was only 2.1%.
Support and resistance
At the moment, the price has dropped below the level of 1.1230 (Murray [4/8]), which gives the prospect of further decline to the area of 1.1108 (Murray [3/8]) and 1.0986 (Murray [2/8]). In case of a breakdown of 1.1280 (Fibo retracement 61.8%), a correction to 1.1474 (Murray [6/8], Fibo retracement 50.0%) is possible, but this is unlikely to lead to a reversal of the downtrend, which is indicated by the downward reversal of Bollinger Bands and an increase in MACD histogram in the negative zone.
Resistance levels: 1.1474, 1.1596, 1.1718.
Support levels: 1.1230, 1.1108, 1.0986.
This week, the EUR/USD pair is correcting downwards and is currently trading at the level of 1.1230. The euro is under pressure from a new wave of coronavirus, which forces the authorities to impose new serious quarantine restrictions. The Austrian government has announced a complete internal isolation; similar measures are also being discussed in Germany. Outgoing Chancellor Angela Merkel insists on introducing a two-week quarantine in the country, but the new government, led by Olaf Scholz, has so far abandoned this step, although the epidemic situation in Germany is rapidly deteriorating. In general, the threat of tougher quarantine measures scares investors, as it could put pressure on consumer demand and the service sector and slow down the recovery of the European economy.
The American currency looks more stable as the market expects the US Fed to introduce new measures to reduce stimulus. Based on the published minutes of the November meeting of the regulator, we can say that the officials are ready to accelerate the pace of reducing bond purchases or raise interest rates if inflation continues to rise. According to the latest data, the state of the American labor market is improving, which is the second reason for the likely hike in rates. Last week, the number of initial applications for unemployment benefits fell again to 199K, and the total number of citizens receiving benefits dropped to 2.049M. However, high inflation is contributing to a slowdown in economic growth, which in Q3 was only 2.1%.
Support and resistance
At the moment, the price has dropped below the level of 1.1230 (Murray [4/8]), which gives the prospect of further decline to the area of 1.1108 (Murray [3/8]) and 1.0986 (Murray [2/8]). In case of a breakdown of 1.1280 (Fibo retracement 61.8%), a correction to 1.1474 (Murray [6/8], Fibo retracement 50.0%) is possible, but this is unlikely to lead to a reversal of the downtrend, which is indicated by the downward reversal of Bollinger Bands and an increase in MACD histogram in the negative zone.
Resistance levels: 1.1474, 1.1596, 1.1718.
Support levels: 1.1230, 1.1108, 1.0986.
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