- EUR/USD testing day highs at 1.1860 after bouncing at 1.1825 lows.
- The euro remains strong despite the sluggish EU business activity data.
- EUR/USD unlikely to test 1.1900 – UOB.
The euro’s bearish correction seen earlier during the early North American session has been contained at 1.1825 and the pair bounced up again to test intraday highs at 1.1860.
Euro resumes its uptrend as risk aversion eases
The common currency has shrugged off the sluggish eurozone data and the increase of COVID-19 infections in the continent and remains positive against the US dollar. The greenback has been on the back foot most of the week amid the uncertainty about the outcome of the US Presidential elections and the lack of progress on the coronavirus stimulus negotiations.
The macroeconomic calendar, however, has not been supportive of the euro as the preliminary Eurozone business activity has shown mixed figures. Despite the larger than expected increase in the manufacturing index, services sector activity has contracted further, with Germany and France showing weaker than expected prints, which suggests that the second COVID-19 wave might be affecting the incipient economic recovery.
EUR/USD unlikely to test 1.1900 – UOB
Despite the near term positive trend, the FX analysis team at UOB sees few chances that the EUR/USD might test the 1.1900 level: “We highlighted yesterday that ‘further EUR strength is unlikely’ and expected EUR to ‘consolidate within a 1.1820/1.1885 range’. While EUR did not strengthen further, it traded within a narrower range than expected (1.1810/1.1866). The current price action is still viewed as part of a consolidation phase. That said, the weakened underlying tone suggests EUR could drift lower within a lower trading range of 1.1790/1.1850.”
Technical levels to watch
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