The EUR / USD pair is currently trading with a slight decline, at 0.05%. The price is under pressure from the dynamics of the dollar index and the news about the worsening epidemiological situation in the EU.
Since the beginning of the day, the dollar index has grown by more than 0.1%. Investors are buying the US currency as a protective asset against increased economic and geopolitical risks. Additional support for the dollar index was provided by a sharp weakening of the Australian currency, after the statements of the head of the RBA about a possible decrease in the interest rate from 0.25% to 0.1%.
The news about COVID-19 has a negative impact on the European currency. The day before, the German Chancellor expressed serious concern about the deteriorating epidemiological situation in the country and admitted that the economy would not withstand another lockdown. Therefore, the situation with the pandemic must be brought under control as soon as possible.
According to the latest information, 6,638 new cases of the virus were detected in Germany over the past 24 hours. This is a record figure since the start of the pandemic.
The spread of the second wave of the coronavirus pandemic increases the negative impact on the region's economy. The German economy minister noted that in the third quarter economic indicators will show maximum growth, after which the pace of economic recovery will slow down. Leading indicators point to a slowdown in Q4 growth.
Despite the local decline in general, the fundamental background in the market can be described as neutral. There are pressure factors in the market for both the European and American currencies. Further dynamics of the movement of the currency pair will depend on the investors' appetite for risk.
In the economic calendar today, it is worth paying attention to the publication of weekly data on the US labor market and indices from the Federal Reserve Bank of Philadelphia. Christine Lagarde's statements may have an impact on the European currency. Her speech will take place tonight.
There is a good reversal signal on the chart. After a false breakdown of the support at 1.1730, the currency pair showed a good rebound and broke the local resistance at 1.1750. Now the price is going to retest the level of 1.1730, after which we expect a development of an upward movement to 1.1800.
The main scenario - growth to 1.1800.
An alternative scenario - a breakdown of support at 1.1730 and a decline to 1.1700.
The current fundamental outlook is neutral. We would consider longs from the level 1.1730.
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