- EUR/USD pares Friday’s gains and retreats to 1.1800 area.
- The euro under pressure on concerns about COVID-19 impact in Europe.
- EUR/USD: Breach of 1.1770 support might accelerate downtrend.
The euro remains under pressure with the US dollar appreciating across the board on Monday. The tame recovery attempt session the early US session has been capped at 1.1825 and the pair retreats again, approaching to levels near 1.1800.
Concerns about the COVID-19 spread in Europe hurt the euro
The common currency is on track to a 0.4% decline on Monday, with the investors spooked by the impact of the second coronavirus wave in Europe. France has acknowledged that the pandemic is “out of control” after hitting more than 52,000 new cases and Spain and Italy have introduced curfews and tighter restrictions in an attempt to curb the sharp rise of contagions.
On the macroeconomic front, the German Business Climate has increased negative pressure on the euro. The sharper than expected deterioration in its benchmark IFO Index, which declined in October for the first time in the last six months suggests the growing concerns about the impact of the pandemic on an incipient recovery.
EUR/USD: A break below 1.1770 will accelerate the decline
The risk on the euro is skewed to the downside, according to Valeria Bednarik, Chief Analyst at FXStreet, who points out to key support at 1.1770: “The 4-hour chart shows that the pair is developing below a mildly bearish 20 SMA, although above the 100 and 200 SMA. Technical indicators, in the meantime, have limited directional strength, but hold within negative territory (…) The EUR/USD pair has an immediate support level at 1.1770, the level to break to put the pair in the bearish path.”