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EUR/USD has bounced amid a marginally better market mood which may be a selling opportunity. Yohay Elam, an Analyst at FXStreet, explains why the current calm may turn to a fresh downfall.

Key quotes  

“EU leaders toned down their rhetoric regarding banning exports of vaccines amid concerns of hurting supply chains. The bloc still allows blocking of immunization shipments out of the EU and seems especially keen on punishing AstraZeneca.”  

“Coronavirus cases continue rising in the old continent and are also causing a rift between the largest countries – Germany will now ask people coming from France to show a negative PCR test due to rising infections. The move has caused tensions between Paris and Berlin, which have worked closely together in this crisis.”

“Investors were encouraged by the drop of US jobless claims to 684,000, the lowest since the pandemic broke out. However, Personal Spending and Personal Income due out on Friday may show a drop in February after a stimulus-related jump in January. Core PCE, the Federal Reserve’s preferred gauge of inflation, will likely remain subdued as well.”  

“President Joe Biden pledged to inject 200 million vaccine doses in his first 100 days in office. On the other hand, COVID-19 infections have bottomed out in the US and have begun rising. The immunization campaign is running at full speed, but there is still room to run in order to approach herd immunity that would significantly depress the disease.”

“Euro/dollar is suffering from downside momentum on the 4-hour chart and is trading below the 50, 100 and 200 Simple Moving Averages. The Relative Strength Index is just above 30, outside oversold conditions and implying further falls are on the cards.”