The US dollar is still under pressure. Since the beginning of the day, the dollar index has dipped by 0.1%. In relation to that, the EUR / USD pair is trading in the green zone, but the prospects for the development of an upward movement remain limited.
The vulnerability of the European currency is caused by problems in the economy amid the second wave of the pandemic and Brexit uncertainty. EU countries continue to tighten quarantine measures amid the active spread of the disease. A partial or complete lockdown in individual countries will inevitably have a negative impact on the economies of the EU countries. Against this background, the ECB may agree to further easing of monetary policy, which will increase pressure on the European currency in the medium term.
Uncertainty about Brexit is also having a strong deterrent effect on the European currency. There is very little time left until the completion of the negotiations, and the parties were unable to resolve key issues. The likelihood of Brexit without a trade agreement is growing. If this happens, both pound and euro will be under strong pressure.
The US dollar is also under pressure. Political uncertainty and a difficult epidemiological situation in the United States have a negative impact on the national currency. Now investors are closely following the data of macroeconomic statistics from the United States to assess the extent of the impact of the pandemic on the economy. Today, the focus will be on retail sales data. Experts expect sales growth to slow down from + 1.9% in September to 0.5% in October.
In general, the fundamental background for the currency pair can be characterized as neutral. Both currencies are now very vulnerable and investors cannot decide on the priority direction of movement, therefore, trading is held in different directions.
The price is still holding in the range of 1.1815-1.1865. It is likely that trading in the range will continue today. In the medium term, a scenario with a breakdown of the level of 1.1865 and an increase in quotations to 1.1920 seems to be more likely to be realized.
The main scenario is a consolidation in the range 1.1815-1.1865.
An alternative scenario is a breakdown of resistance at 1.1865 and growth to 1.1920.
The current fundamental outlook is neutral. We continue to prioritize longs with entry points in the area around the level of 1.1815.
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