- EUR/USD lacks clear directional bias and is stuck in Tuesday’s 63-pip range.
- Renewed signs of German economic slowdown post downside risks to the single currency.
- ECB’s Lagarde is likely to reiterate dovish bias.
EUR/USD is in stasis amid increased hopes for coronavirus vaccine and evidence of a renewed slowdown in the German economy. The European Central Bank President Lagarde’s speech, due at 13:00 GMT, may provide a clear directional bias to the common currency.
Indecisive market
The currency pair traded back and forth on Tuesday, forming a Doji candle on the daily chart. The Doji, a sign of indecision in the market place, has made Wednesday’s close pivotal. The bias would turn bullish if the pair ends Wednesday above the Doji candle’s high of 1.1843. Alternatively, a daily close under 1.1780 (Doji’s low) would imply a bearish reversal.
The pair is currently locked in Tuesday’s range of 1.1780-1.1843, meaning both bulls and the bears are not willing to lead the price action.
Focus on ECB speak
With several Eurozone nations back in the economically-painful coronavirus lockdown restrictions, ECB’s President Lagarde has little room to sound hawkish.
The German economy is already showing signs of weakness. The German ZEW index dropped from 56.1 to 39 in the month of November, reflecting concerns about a double-dip recession. “The data marks the beginning of what should be a series of weaker economic reports poised to plague the currency,” BK Asset Management’s Kathy Lien noted while adding that the shared currency should be trading close to 1.16 than 1.20.
The odds, therefore, appear stacked in favor of a break below the Doji candle’s low of 1.1780. The downside could be limited if the global equity market continues to cheer prospects of coronavirus vaccine.
The pair will likely pick up a strong bid if Lagarde sounds less dovish in the wake of the positive news on the vaccine front. On Monday, the US drugmaker Pfizer announced that its coronavirus vaccine is more than 90% effective in preventing coronavirus in participants without evidence of prior SARS-CoV-2 infection.
Technical levels
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