- EUR/USD regains ground lost on Friday and returns to 1.1870.
- Positive news regarding a coronavirus vaccine boosts the risk-on trade.
- German, EMU flash manufacturing PMIs surprised to the upside.
The single currency starts the week on a positive note and pushes EUR/USD once again to the upper end of the recent range near 1.1870.
EUR/USD still capped by 1.1900
EUR/USD fades Friday’s downtick and advances to the 1.1870/80 band at the beginning of the week, always sustained by the improvement in the risk complex, particularly in response to earlier news regarding the development of a vaccine from biopharmaceutical AstraZeneca.
In addition, the weakness surrounding the greenback lends extra support to the pair, as investors continue to view past the pandemic and anticipate a strong recovery in the global economy.
In the euro docket, Markit’s flash manufacturing PMI came in above estimates in Germany (57.9) and the broader euro area (53.6) for the current month, while it disappointed expectations in France (49.1). Still in the region, ECB’s I.Schnabel will speak later in the session.
Across the Atlantic, Markit will also publish its advanced PMIs followed by the Chicago Fed Index and speeches by FOMC’s Daly and Evans.
What to look for around EUR
EUR/USD failed to retest – let alone surpass – the 1.1900 level despite the favourable context during last week. In the very near-term, however, EUR/USD is expected to remain under scrutiny on the back of the impact of the pandemic on the region’s economy and political developments surrounding the EU Recovery Fund. In addition, the dovish stance from the ECB and the potential announcements of extra stimulus in December also cap potential gains in the pair.
EUR/USD levels to watch
At the moment, the pair is gaining 0.22% at 1.1881 and a break above 1.1920 (monthly high Nov.9) would target 1.1965 (monthly high Aug.18) en route to 1.2011 (2020 high Sep.1). On the flip side, immediate contention aligns at 1.1745 (weekly low Nov.11) followed by 1.1709 (Fibo level of the 2017-2018 rally) and finally 1.1602 (monthly low Nov.4).
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