Key factor driving the FX market

- Austria enters nationwide lockdown. Germany is also reportedly mulling such a course of action.

Heading into the weekend, all major currencies except for the British pound closed in the red. The biggest losses were seen in the single currency (-1.42%) and the Australian dollar (-1.41%). Smaller decreases were shown by the Swiss franc (-0.98%), the New Zealand dollar (-1.03%), the Canadian dollar (-0.76%), and the Japanese yen (-0.41%). Sterling closed in positive territory (+0.22%).

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On Friday, November 19, the EURUSD pair slid 0.78% to 1.1281. The euro and other currencies plummeted on news that Austria declared a lockdown effective today. Europe again faces a new set of restrictions. In the upshot, the euro fell to 1.1249.

The Austrian government has announced a lockdown in the country, which will last for at least 10 days but could be extended to a maximum of 20 days. Austria became the first European country to impose movement restrictions on those not been vaccinated against COVID-19.

German Health Minister Jens Spahn also said that a nationwide lockdown cannot be ruled out. Germany has recently seen record-breaking numbers of daily infections. Last Wednesday, the number of new coronavirus cases in the country surged by 68,366, the highest ever daily tally.

Today’s macro agenda (GMT+3)  

• 18:00 Eurozone: flash consumer confidence (November); US: existing home sales (October)

Current outlook

The dollar opened slightly higher today, with the DXY index rising to 96.20. However, the uptrend stalled. By the time of writing, the DXY stood at 96.12. Antipodeans topped the leaderboard.

The economic calendar is a blank slate today. This week, traders will be focused on Covid-19-related news, speeches by Christine Lagarde and Andrew Bailey, PMI indices for the manufacturing and services sectors in Europe and the US, as well as the upcoming RBNZ meeting.

Technical analysis

EURUSD has stabilized at 1.1273 (45-degree angle of the Gann fan). Given upside in the AUDUSD and NZDUSD pairs, and Monday’s empty economic calendar, buyers have the chance to push for a retracement to the 55-day SMA (balance line at1.1320). The longer the side trend near 1.1250 persists, the lower the target will be. On the daily TF, the key support level is located at $1.0900.

In the EURGBP pair, the euro is under pressure from expectations of a 15 bp rate hike by the BoE. If pressure on the euro intensifies in the cross, it will immediately exert an impact on the main pair. Furthermore, if the dollar rally resumes, the euro will crash in line with the trends seen on November 15 and 19.