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Hello, dear traders!
Yesterday, the US dollar was weakening amid the news about successful COVID-19 vaccine trials. On Monday, the American pharmaceutical company Moderna announced its experimental vaccine against Covid-19 was almost 95% effective.
At the same time, the pandemic is tightening its grip on the United States and Europe. In the euro area, the worst situation is in France, Italy, and Spain. In these countries, infections among people over 60 have climbed to the highest level. Notably, since the start of the pandemic, the number of coronavirus cases in Europe has exceeded 15 million.
As for the presidential election in the United States, Donald Trump, despite filing an appeal on vote fraud, actually acknowledged the victory of his opponent Joe Biden. This factor, namely Biden's victory, also contributed to the weakening of the American currency. However, economists believe that this effect will be short-term.
As for the US economy, Fed's head Jerome Powell believes that it is recovering at a faster pace than previously estimated. However, recently, the recovery has slowed down. Powell reassured that the Fed was aware of what it was doing and that at the right time, all stimulus measures would be stopped. According to yesterday's mixed US statistics, the economic recovery in the country slowed down. Thus, retail sales turned out to be worse than expected. Meanwhile, industrial production increased, beating economists' forecast.
Today, the following reports are set for release: the euro area's CPI, US new building permits and housing starts, as well as the speeches of the Fed's Evans, Williams and Bullard.
Daily
As for the technical analysis of EUR/USD, bulls have been unable to break through the strong technical zone of 1.1860-1.1880 which acts as resistance and does not allow the price to go higher. On November 17, the quote increased to 1.1893 but failed to consolidate and pulled back. Yesterday's closing level was 1.1860. Today, given yesterday's highs and a long upper shadow of the last candlestick, the task for bulls is now even more difficult. It is no longer enough for them to close the day above 1.1880, they need to reach new highs, and break through the resistance zone of 1.1900-1.1920. At the time of writing the article, EUR/USD was moving in the upward trend and was trading near 1.1884, gradually approaching yesterday's highs.
H1
Despite the high likelihood that the euro/dollar pair will continue strengthening today, one should refrain from buying below the resistance levels of 1.1893 and 1.1919, wait for a pullback to 1.1875, 1.1870, and 1.1865/60, and consider opening long positions close to these prices. If bearish Japanese candlesticks appear under the resistance level of 1.1893 and/or in the 1.1900-1.1920 area, it will indicate that the quote cannot move further in the upward direction. Consequently, it will reverse.
Good luck!
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