EUR/USD Forecast: Dollar longs return on vaccine hopes

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1809

Risk appetite soared after Pfizer reported outstanding results on its coronavirus vaccine.
US indexes soared to all-time highs, while US Treasury yields reach levels last seen in March.
EUR/USD at shed over 100 pips from daily tops on sudden dollar’s demand.

US stocks soared to new all-time highs, and the greenback rallied in the American session as risk-appetite took over. All sectors rallied, led by Pfizer, as the US pharmaceuticals alongside German biotech firm BioNTech announced their COVID-19 vaccine is more than 90% effective in preventing coronavirus. Financial markets were already in a risk-on mood, as the US media called Joe Biden the presidential rally winner over the weekend. The EUR/USD pair topped at 1.1919 to plunge to 1.1794, now trading around the 1.1800 level.

A vaccine will likely mean the end of lockdowns and restrictions, and hence, a sharp economic comeback. However, it will take up to the second half of next year for the vaccine or vaccines to reach enough people to grant a more normal return to activities. Nevertheless, optimism will prevail.

It’s a light week in terms of macroeconomic data. This Monday, Germany published its September Trade Balance, which posted a surplus of €17.8 billion, missing the market’s expectations. The EU Sentix Investor Confidence index resulted in -10, worse than the previous -8.3, although better than the -15 expected. On Tuesday, Germany will publish the German ZEW Survey on Economic sentiment, expected to have deteriorated in the country in November, but improve for the EU.

EUR/USD short-term technical outlook

The EUR/USD pair found support at the 38.2% retracement from its latest bullish run, measured from 1.1602 to the mentioned daily high of 1.1919. The 4-hour chart shows that the pair is currently struggling around a bullish 20 SMA, which maintains its upward slope above the larger ones. Technical indicators in the mentioned time-frame turned sharply lower, from overbought to neutral levels, still holding within positive levels. The immediate support level is 1.1790, with further declines expected on a break below it.

Support levels: 1.1790 1.1750 1.1710

Resistance levels: 1.1845 1.1880 1.1920

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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