Eurozone coronavirus cases are on the rise, prompting additional restrictions across the old continent while US fiscal stimulus talks are going nowhere fast. The EUR/USD pair reflects these developments as seems to have mark a top at 1.1830. Terence Wu, FX Strategists at OCBC Bank, sees the world’s most popular currency pair heading towards 1.17.
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“Market participants, especially the equity guys, may finally price out the odds of US fiscal stimulus in the coming weeks. This should put a pause on any risk-on bias as the market runs out of positives for now. Moreover, the virus situation in Europe continues to worsen. Do not rule out a more defensive tilt as we approach the US elections, providing some support for the USD.”
“A near-term top may have been seen at around 1.1830, as the focus in Europe shifted to the containment of the second-wave virus spread.”
“Expect the EUR/USD pair to be implicitly heavy for now, with risk-reward likely tilted in favour of 1.1700.”