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Euro falls as Spain and Italy unveil sweeping circuit-breaker rules

The euro declined in early trading as traders focused on the rising Covid-19 cases in European countries and measures implemented by Italy and Spain to deal with it. In a statement, the Italian government said that it would introduce the toughest health restrictions since the end of the first wave in May. It unveiled these measures as the number of cases continued to rise. The country recorded a record 21,773 new cases yesterday. In Spain, the government unveiled a nationwide curfew after cases rose by a third during the weekend. The same surge happened in other European countries like Germany and France.

US equities declined in the futures market as hopes of a stimulus deal in the US faded. While talks continued during the weekend, Nancy Pelosi and Steve Mnuchin traded blame for the stalemate. Nancy Pelosi blamed the president for not pushing more Republicans to accept the $2.2 trillion deal. The equities are falling ahead of key earnings this week. Notable companies that will publish their earnings this week are Amazon, Google, and Facebook. 

Meanwhile, the market is also reacting to deal-making in the market. Over the weekend, Blackstone agreed to acquire Simply Self Storage in a deal valued at more than $1.2 billion. In another deal, Inspire Brands said it would acquire Dunkin Brands for $9 billion.

The economic calendar will not have many events today. In the morning session, the Japanese statistics office will release the leading index and coincident indicator. The leading index combines several indicators. In Turkey, we will receive the capacity utilisation and manufacturing index. These numbers will come a few days after the central bank left interest rates unchanged. In Europe, we will receive the business expectation and climate numbers from the Ifo Institute. Finally, from the US, we will receive the new home sales numbers.

EUR/USD

The EUR/USD price declined to the current low of 1.1835. On the 30-minute chart, the price is along the 23.6% Fibonacci retracement level. The 15-day and 25-day moving averages have also made a bearish crossover. The RSI has dropped from the overbought level of 70 to the current level of 17. The pair has also formed a head and shoulders pattern. Therefore, for today, the pair may drop to a low of 1.1825, which is the neckline of the H&S pattern. 

EURUSD

XBR/USD

The price of crude oil gapped lower as the market reacted to the rising number of Covid-19 cases. It reached a low of 41.32, which is the lowest it has been since October 5. On the hourly chart, the price has moved below the important support of 41.50. The price is along the lower line of the Bollinger bands while the RSI has moved to the oversold level of 29. It is also forming a bearish pennant pattern, which is an indication that it will continue falling.

XBRUSD

GBP/USD

The GBP/USD pair declined to a low of 1.3025. On the four-hour chart, the price has moved below the middle line of the Donchian channel. Notably, the price started the reversal after it reached the upper level of the previous channel at 1.3165. The RSI also moved from the overbought level to the current low of 47. For today, the pair may continue falling as bears target the support at the lower line of the Donchian channel at 1.2950.

GBPUSD

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OctaFx Analyst Team

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Euro falls as Spain and Italy unveil sweeping circuit-breaker rules