EUR/USD: Upside remains capped by 1.1900 amid upbeat market mood
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- EUR/USD stalls upside despite broad US dollar weakness.
- Risk assets cheer a likely split US Congress following a Biden win.
- ECB Lagarde’s speech, Eurozone Sentix and risk trends in focus.
The buying interest around EUR/USD remains unabated heading into the European open, as the advance extends into a fifth straight session on Monday.
At the time of writing, the spot adds 0.12% at 1.1885, having failed several attempts to take out the 1.1900 level.
Broad-based US dollar weakness amid the upbeat market mood remains the main underlying theme, which helped the spot to recapture the 1.1900 level to reach its highest levels since mid-September.
The sentiment remains buoyed by the expectations of fewer regulatory reforms and additional monetary stimulus under US President-elect Joe Biden while the Republicans take hold of the upper chamber, the Senate.
The Eurostoxx 50 futures and Germany’s DAX futures rally nearly 2%, suggesting a positive open on the European indices, which could further bolster the market mood and exert additional downside pressure on the safe-haven US dollar.
“The pair's upside, however, may stall if the coronavirus numbers continue to rise across Eurozone. Major Eurozone economies like Germany and France have already declared a month-long lockdown and France is reportedly planning to downgrade forecasts for 2021 economic output,” FXStreet’s Analyst Omkar Godbole explains.
According to the latest survey conducted by the Bank of France, the French economy is seen operating 12% lower from normal levels under the new lockdown vs. 31% loss seen during April’s lockdown.
Germany’s exports surpassed expectations, with +2.3% in September vs. +1.4% expected while the Current Account surplus expanded in the reported month. The focus now shifts towards the Eurozone Sentix Investors’ Confidence data and ECB President Christine Lagarde’s speech for fresh impetus.
EUR/USD technical levels
The bulls need a decisive break above the July high of 1.1910 to extend the upside towards the psychological 1.1950 level. To the downside, immediate support is seen at 1.1840 (5-DMA), below which Friday’s low of 1.1795 could be tested.
EUR/USD additional levels
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