- A combination of factors assisted EUR/USD to gain some follow-through traction on Monday.
- Optimism over a potential COVID-19 vaccine continued undermining the safe-haven greenback.
- The market reaction to an agreement on the EU recovery fund turned out to be ‘sell the fact’ play.
The shared currency started the week on a positive note and remained well supported by expectations of an agreement on the massive EU pandemic recovery fund. This comes amid fresh hopes of a potential COVID-19 vaccine, which drove flows away from the safe-haven US dollar. Oxford University said on Monday that early-stage human trials for its vaccine for the highly contagious disease – co-development with AstraZeneca – showed positive results. This, in turn, assisted the EUR/USD pair to gain some follow-through traction on Monday, marking its sixth day of a positive move in the previous seven.
The pair finally settled near the top end of its daily trading range and popped to the highest level since March 9 during the Asian session on Tuesday. The uptick was sponsored by reports that the European Union has reached a highly-anticipated deal on the €750 billion coronavirus recovery fund – aimed at aiding the region’s worst-hit economies. Given that the optimism has been flowing into the single currency over the past few weeks, the market reaction was pretty much a 'buy the rumour, sell the fact' play.
The pair failed to capitalize on the early uptick, rather witnessed a modest pullback and was last seen trading below mid-1.1400s. As investors digest the latest developments, the USD price dynamics might not turn out to be an exclusive driver of the pair's momentum amid absent relevant market-moving economic releases, either from the Eurozone or the US.
Short-term technical outlook
From a technical perspective, the near-term bias still seems tilted in favour of bulls and any subsequent slide might still be seen as a buying opportunity near the 1.1400 mark. That said, a convincing breakthrough could drag the pair further towards the 1.1330 horizontal support en-route the 1.1300 mark. Some follow-through selling now seems to pave the way for further weakness towards the 1.1260 horizontal zone before the pair eventually drops to sub-1.1200 levels.
On the flip side, sustained move back above mid-1.1400s will set the stage for a move towards challenging YTD tops, just ahead of the key 1.1500 psychological mark. Above the mentioned level, bulls are likely to lift the pair further towards 2019 yearly swing highs, around the 1.1570 region.
-637309069810846041.png)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD retreats below 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory slightly below 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD stays under modest bearish pressure near 1.2650
GBP/USD edges lower toward 1.2650 after posting marginal losses on Thursday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to gain traction. Fed policymakers are scheduled to speak later in the day.
Gold clings to modest gains near $2,390, Fed speakers in focus
Gold trades with a positive bias on Friday and fluctuates in positive territory near $2,390. The benchmark 10-year US Treasury bond yield stays flat near 4.4% following Thursday's rebound, allowing XAU/USD to keep its footing ahead of speeches from Fed officials.
XRP steadies at $0.51 as Ripple plans to expand XRP Ledger, custody services in Africa
Ripple hovers close to $0.51 on Friday, above the psychologically important $0.50 level, as traders await the court ruling of the lawsuit against the US SEC and amid new commitments from the firm to expand its services in Africa.
Disputes and De-risking: US-China trade dispute changes trade flows
The bilateral trade dispute between the US and China is entering a new round and is leading to renewed discussions about the deglobalisation of global trade in goods.