EUR/USD erases losses as risk tone recovers, dovish Fed expectations persist

EUR/USD regains poise, tracking risk recovery in stocks.
Hopes for swift vaccine-led global economic recovery overshadow rising coronavirus cases.
Dips remain well supported by expectations for additional Fed easing.

Omkar Godbole FXStreet Contributor

EUR/USD has reversed early losses, with the risk assets regaining poise despite rising odds of coronavirus-induced lockdown restrictions in major economies.

EUR/USD bounces from 1.1850

The pair is currently trading near 1.1868, representing marginal gains on the day, having put in a low of 1.1850 during the Asian session.

Asian stock markets got off to a negative start early Tuesday. This happened after some overnight losses on Wall Street, as investors sold risk on concerns that the US authorities would impose the economically-painful lockdown restrictions to contain the coronavirus outbreak. As such, the dollar picked up a bid and pushed EUR/USD lower.

However, the haven demand for the dollar has weakened in the past couple of hours, with the major Asian indices such as Hong Kong's Hang Seng and the Shanghai Composite carving out gains.

The uptick could be associated with the expectations for a coronavirus-driven swift global economic recovery in 2021 and dovish Federal Reserve (Fed) expectations.

Investors believe the Fed would do the heavy lifting to compensate for the US Congress' inability to approve a fiscal stimulus deal. The central bank recently expressed a willingness to do more if required.

Additional bullish pressure for the EUR could be stemming from hopes for an EU fiscal deal. On Tuesday, European Economics Commissioner Paolo Gentiloni said that he expects a positive solution to Poland and Hungary's blockage of the EU's 1.8 trillion euro ($2.14 trillion) financial package to revive the bloc's COVID-hit economy.

The risk reset and the bearish sentiment around the dollar could keep the EUR/USD better bid in Europe. The final Eurozone Consumer Price Index for October, due at 10:00 GMT, may not have a significant impact on the euro unless the data carries a significant downward revision to the recently published preliminary forecasts. That would validate the need for additional European Central Bank easing.

Technical levels

EUR/USD

Overview
Today last price	1.1868
Today Daily Change	0.0003
Today Daily Change %	0.03
Today daily open	1.1865

Trends
Daily SMA20	1.1787
Daily SMA50	1.1773
Daily SMA100	1.172
Daily SMA200	1.1363

Levels
Previous Daily High	1.1894
Previous Daily Low	1.1842
Previous Weekly High	1.192
Previous Weekly Low	1.1746
Previous Monthly High	1.1881
Previous Monthly Low	1.164
Daily Fibonacci 38.2%	1.1874
Daily Fibonacci 61.8%	1.1862
Daily Pivot Point S1	1.1841
Daily Pivot Point S2	1.1816
Daily Pivot Point S3	1.1789
Daily Pivot Point R1	1.1892
Daily Pivot Point R2	1.1919
Daily Pivot Point R3	1.1943

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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