- EUR/USD failed to capitalize on the overnight bounce and witnessed some fresh selling on Tuesday.
- The discovery of a new COVID-19 variant benefitted the safe-haven USD and exerted some pressure.
- The lack of any strong follow-through selling warrants caution before placing aggressive bearish bets.
The EUR/USD pair remained depressed through the early European session and was last seen trading near the lower end of its daily trading range, just abvoe the 1.2200 round-figure mark.
The pair failed to capitalize on the previous day’s goodish rebound of over 130 pips from three-day lows, instead met with some fresh supply on Tuesday amid a broad-based US dollar strength. The discovery of the fast-spreading new variant of the coronavirus continued weighing on investors’ sentiment.
Apart from this, investors remain worried about the potential economic fallout from the imposition of new lockdowns and travel restrictions. The development overshadowed the passage of additional US fiscal stimulus measures, which, in turn, was seen as a key factor that benefitted the greenback’s safe-haven status.
It is worth reporting that the US House of Representatives passed a long-awaited $892 billion coronavirus aid package on Monday, alongside a $1.4 trillion measure to keep the government funded for another year. The bill is now under review by the Senate and will become law once passed and signed by the US President Donald Trump.
That said, the EUR/USD pair, so far, has managed to hold just above the 1.2200 mark and well within the previous day’s trading range. This makes it prudent to wait for some strong follow-through selling before traders start positioning for any meaningful corrective slide from over two-and-half-year tops, around the 1.2270-75 region touched last week.
Market participants now look forward to the US economic docket – featuring the releases of the final Q3 GDP report, Richmond Manufacturing Index, Conference Board’s Consumer Confidence Index and Existing Home Sales. The data, along with the broader market risk sentiment, will influence the USD price dynamics and produce some trading opportunities around the EUR/USD pair.
Technical levels to watch
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