On Tuesday in Asia, the EUR / USD pair traded slightly lower due to the strengthening of the USD. Investors are abandoning risky assets due to the difficult epidemiological situation around the world and concerns about the implementation of a new stimulus program in the United States. The US dollar acts as a defensive asset against growing uncertainty and risks.
Concerns about the more deadly and infectious strains of the GOVID-19 virus neutralize all investor optimism associated with the start of the vaccine and the increase in stimulus measures from the world central banks and governments.
Investors' appetite for risk is negatively affected by the growing uncertainty about the Republican Party's proposed fiscal stimulus plan proposed by US President Biden. Recently the leader of the Democratic majority Chuck Schumer stated that it may take four to six weeks to conclude a comprehensive agreement.
Considering the above, world indices are in the red zone today, strengthening support for the dollar.
The European currency has nothing to counter the onslaught of the dollar so far. The IFO indexes published yesterday were below market expectations. Against the background of strengthening and extending quarantine restrictions, the situation in the EU economy continues to deteriorate. Recently Christine Lagarde said that in the 4th quarter of the EU GDP will show negative dynamics. Hopes for a recovery in the EU economy in 2021 remain, but it is clear that the recovery will start later than expected.
In the economic calendar today it is worth paying attention to the publication of CB data on the US consumer confidence index in January. The indicator is expected to grow from 88.6 to 89.0 points.
The bearish signals are still prevailing locally on the chart. From the current position, we can expect the development of a moderate retracement movement to the range 1.2160-1.2175, from where the downward movement can be resumed.
The main scenario is an increase to 1.2160 and a downward reversal.
Alternative scenario is a decline to 1.2050 from current levels.
The current fundamental outlook is moderately negative. Within the day, shorts remain a priority. We are looking for entry points on the price rollback to the level of 1.2160.
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