EUR/USD Soft After Last Week’s Drop

EUR/USD - H1

On Friday, we saw a resurgence of fear around the Covid-19 situation in Europe, as Austria announced full lockdown in order to contain the spread of the pandemic ahead of the holidays, providing sellers the catalyst that was required for fresh 2021 lows.

This came in a backdrop of Fed/ECB diverging rhetoric, as Ms Lagarde had once again pushed back against tightening of monetary policy, while some key Fed officials made the case for faster QE tapering.

EUR/USD remains in a precarious position and risk for lower lows below 1.1240 is high, although it may be early for sub-1.1184 moves.

On the other hand, the pair managed to defend 1.1240 and an effort to reclaim 1.1290-1.1300 could be in the cards, as sentiment looks improved, but the upside seems to have important hurdles. Under current conditions, we struggle to see how it can push through this month's descending trend-line and EMA100 (currently at around 1.1330-5) that will pause the downward momentum.

Today's docket does not feature any major economic releases, but markets will continue to monitor the Covid-19 situation in Europe. Tomorrow, focus will shift ta a series of PMIs. This week, we are also likely to find out if Mr. Powell will remain at the helm of the US Federal Reserve, or if he will be replaced.


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Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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