The EUR / USD pair today partially recovered from Monday losses (+ 0.1%) due to a decrease in pressure from USD.
On Monday, the balance of power in the market was significantly changed by reports from Pfizer that their vaccine showed 90% effectiveness in trials. Demand for gold, Japanese yen and other defensive assets fell sharply. The dollar, which some investors also see as a defensive asset, on the contrary, was able to strengthen its position in the market, increasing pressure on other major currencies.
The situation on the market stabilized on Tuesday. Speculators began to fix long positions in the dollar. All G7 currencies, with the exception of the Swiss franc, are trading higher against the US dollar.
Today in Europe, the focus will be on indices from the ZEW Institute for Germany. The indicators will show the degree of impact of the coronavirus pandemic and partial lockdown on the economic situation in Germany. Experts predict a sharp decline in performance. If the actual values turn out to be below market expectations, the European currency may come under pressure again.
Political news remains in the spotlight in the US. Most likely Joe Biden will be sworn in on January 20, but the question remains open whether the Democrats will manage to get the majority of seats in the Senate. Otherwise, Biden's opportunities for implementing initiatives will be severely limited. Donald Trump continues to challenge the election results.
Yesterday, the currency pair tested the resistance at 1.1920. The price bounced down very strongly. The key support level is now at 1.1785. If the bears overcome this barrier, the next target will be the level of 1.1700.
The main scenario - a breakdown of the support at 1.1785 and a decline to 1.1700.
An alternative scenario - a breakdown of the local resistance at 1.1865 and an increase to 1.1920.
The current fundamental outlook is neutral. We consider shorts in the range of 1.1850-1.1870.
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