- EUR/USD has been rising as markets await additional vaccine news.
- Concerns about rising coronavirus cases are pushed away for now.
- Monday's four-hour chart is painting a bullish picture for the currency pair.
A new week, another immunization announcement? On Monday last week, markets soared in response to the news from Pfizer and BioNTech – reporting 90% efficacy in their interim results for a coronavirus vaccine. Massachusets-based Moderna is set to report preliminary figures from a similar Phase 3 trial during this week. As both firms use the same messenger RNA technology, expectations are high.
The safe-haven US dollar is on the back foot amid these hopes and is also pressured by a dose of political calm in the US. Additional Republican leaders have called on President Donald Trump to enable a smooth transition to the team of President-elect Joe Biden.
Trump seemed to recognize Biden's victory in a tweet on Sunday, but quickly retracted and repeated unsubstantiated claims that the process was rigged. Nevertheless, the president's court cases made no traction and a recount in Georgia is set to leave Biden as the winner.
The president-elect also added to optimism as his campaign clarified that he does not intend to impose a nationwide lockdown that would choke the economic recovery. It is unclear if the incoming administration would be able to introduce massive stimulus – which depends on controlling the Senate. Two runoff races in Georgia will determine control of the upper chamber.
Another reason for optimism comes from the Federal Reserve, which opened the door to expanding its bond-buying scheme – another dollar downer. Steve Englander at Standard Chartered suggested that the Fed could act even before its mid-December decision, given the increase in COVID-19 cases.
Coronavirus infections, hospitalizations, and deaths are on the rise on both sides of the Atlantic, and markets currently shrug it off.
Source: FT
Germany is reportedly considering tightening its "lockdown light" restrictions and several US states are also imposing restrictions. Nevertheless, at least for now, the focus is on the future rather than the present.
How long will this continue? Probably until additional vaccine news is out, at which point markets could suffer profit-taking – a "buy the rumor, sell the fact" response.
EUR/USD Technical Analysis
Euro/dollar is benefiting from upside momentum on the four-hour chart and trades above the 50, 100 and 200 Simple Moving Averages. The Relative Strength Index is just below 70 – thus outside overbought conditions.
All in all, bulls have the upper hand.
The currency pair is tackling resistance at 1.1860, which was a swing high in early November. It is followed by 1.19, a psychologically significant level and also a peak several times in recent months. The next cap is 1.1920.
Support awaits at 1.1820, which was a temporary top last week. Further down, 1.1780 and 1.1745 were cushions last week and may come into play if the pair loses ground.
See What you need to know about the dollar in the post-vaccine announcement world
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 holds firm above 1.0700 ahead of German inflation data
EUR/USD trades on a firm footing above 1.0700 early Monday. The pair stays underpinned by a softer US Dollar, courtesy of the USD/JPY sell-off and a risk-friendly market environment. Germany's inflation data is next in focus.
USD/JPY recovers after testing 155.00 on likely Japanese intervention
USD/JPY is recovering ground after crashing to 155.00 on what seemed like a Japanese FX intervention. The Yen tumbled in early trades amid news that Japan's PM lost 3 key seats in the by-election. Holiday-thinned trading exaggerates the USD/JPY price action.
Gold price bulls move to the sidelines as focus shifts to the crucial FOMC policy meeting
Gold price (XAU/USD) struggles to capitalize on its modest gains registered over the past two trading days and edges lower on the first day of a new week, albeit the downside remains cushioned.
Ripple CTO shares take on ETHgate controversy, XRP holders await SEC opposition brief filing
Ripple loses all gains from the past seven days, trading at $0.50 early on Monday. XRP holders have their eyes peeled for the Securities and Exchange Commission filing of opposition brief to Ripple’s motion to strike expert testimony.
Week ahead: FOMC and jobs data in sight
May kicks off with the Federal Open Market Committee meeting and will be one to watch, scheduled to make the airwaves on Wednesday. It’s pretty much a sealed deal for a no-change decision at this week’s meeting.