EUR/USD: Will The ECB Deal A Third Blow To The Euro? Bears Are Gaining Strength

A surprise may come from comments on the exchange rate. Lagarde may note that the rise of the euro pushes inflation lower and that the ECB is monitoring its value closely. The Frankfurt-based institution does not officially target the exchange rate, but it could hint that its recent rise may trigger a rate cut – that would already shock markets and send the euro down, but the chances remain slim at the moment.

Euro/dollar may receive a boost from the US Food and Drugs Administration, which is set to approve the Pfizer/BioNTech coronavirus vaccine, following Canada’s and Britain’s footsteps. A shot in the arm could not come sooner – over 3,000 lives were lost to the virus in America on Wednesday, similar to the death toll in 9/11.

Apart from US fiscal stimulus, investors will also be watching America’s inflation figures, which are set to edge higher in November, and weekly jobless claims. Applications for unemployment benefits are set to rise after dropping last week.

Overall, a busy day awaits traders, with room to the downside. 

EUR/USD Technical Analysis

(Click on image to enlarge)

Euro/dollar has slipped below the uptrend support line that had accompanied it since early December. While the currency pair recaptured the 50 Simple Moving Average, it has yet to top the broken trendline. Momentum remains to the downside.

All in all, bears are in the lead.

Support awaits at 1.2080, which was a swing low on Monday. It is followed by Wednesday’s trough at 1.2060. Further down, 1.2040 and 1.2005 are eyed.

Some resistance is at the daily high of 1.21, followed by 1.2045, which capped EUR/USD on Wednesday. The next level to watch is the 2020 high of 1.2177.

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James Hanshaw 2 months ago Contributor's comment
Susan Miller 2 months ago Member's comment

Interesting thoughts James, thanks for sharing. But with Covid on the way out, I'm more hopeful.

James Hanshaw 2 months ago Contributor's comment

Susan, I am an optimist and a one time fervent believer in the EU’s predecessor forms before it became politicised and thus dysfunctional. Covid has worsened things for many and I see no way out for them - they are trapped in permanent poverty. James

Craig Newman 2 months ago Member's comment

Going to add anything of value to the conversation here or just spam the comments to drive traffic to your own site?

James Hanshaw 2 months ago Contributor's comment

Instead of rudeness why do you not add something of value of your own to the discussion. For the sake of the many driven into poverty I would like to be proven wrong.