News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Are you new to trading? Technical analysis of charts aims to identify patterns and market trends by utilising different forms of technical chart types and other chart functions. Get a refresher on technical analysis or begin building your knowledge here: https://t.co/qV3c7a4YR3 https://t.co/POGWDIkqqz
  • USD hegemony is at risk thanks to changes in the global economy and the long-term consequences of the US-China trade war. Get your market update from @CVecchioFX here: https://t.co/5GO9UrvO4y https://t.co/H76jNJJxU5
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/1TiEWCbJ6t
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/fN2mfHgpON
  • The formation of several bullish technical patterns suggests that the haven-associated Japanese Yen is at risk of further losses against the Euro and Australian Dollar. Get your market update from @DanielGMoss here:https://t.co/qxQwHgD9Ey https://t.co/ym73tgtHLn
  • Natural gas is moving lower after weather models pointed to warmer-than-average temperatures across much of the US. Get your market update from @FxWestwater here:https://t.co/HuXPXu5PFU https://t.co/ytHqOoHnxQ
  • Gold and silver prices may continue to rise in the coming months on the back of falling real rates of return and the prospect of additional fiscal support under a Biden administration. Get your market update from @DanielGMoss here:https://t.co/OMNoNHn2vZ https://t.co/155l4SQU6P
  • Will the Swiss Franc find reprieve after recent losses against the Canadian and New Zealand Dollars as NZD/CHF and CAD/CHF uptrends face key chart barriers? Find out from @FxWestwater here:https://t.co/c89gcaNhTt https://t.co/vkLRsG8KEn
  • The Australian Dollar may be at risk of losses against the New Zealand Dollar after an unexpectedly high NZ inflation reading sent AUD/NZD towards challenging short-term rising trend support. Get your $AUD market update from @ddubrovskyFX here:https://t.co/JoaUMTv80S https://t.co/Hl4I8Gl7Ez
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/6lPNDoWZAw
EUR/USD Rates May Extend Slide Lower on Covid-19 Second Wave Fears

EUR/USD Rates May Extend Slide Lower on Covid-19 Second Wave Fears

Daniel Moss, Analyst

EUR/USD, Covid-19 ‘Second Wave’, Italian-German Yield Spread, Mobility Data – Talking Points:

  • A ‘second wave’ of Covid-19 infections in Europe has notably soured investors’ appetite for risk and may continue to hamper the performance of regional risk-sensitive assets.
  • Widening Italian-German yield spread indicates a sustained period of risk-aversion could be in the making.
  • EUR/USD rates appear poised to slide lower after breaking below the neckline of a bearish Head and Shoulders pattern.

Asia-Pacific Recap

Equities markets broadly gained during Asia-Pacific trade, as news that Democrats are drawing up a new $2.4 trillion stimulus bill to break the Congressional deadlock with Republicans notably buoyed risk appetite. Australia’s ASX 200 index surged 1.28% and Japan’s Nikkei 225 climbed 0.58%.

The haven-associated US Dollar and Japanese Yen lost ground against their major counterparts, as the risk-sensitive Australian Dollar crept marginally higher after recording 5-consecutive down-days for the first time since March.

Gold remained relatively unchanged along US 10-year Treasury yields, while silver slipped 0.2%.

Looking ahead, US durable goods orders for the month of August headline a rather light economic docket.

EUR/USD Rates May Extend Slide Lower on Covid-19 Second Wave Fears

DailyFX Economic Calendar

Covid-19 Second Wave Weighing on EUR/USD Rates

As mentioned in previous reports, the forced reimposition of coronavirus restrictions in several European nations is threatening to upend the Euro-area’s nascent economic recovery and may result in the continued discounting of regional risk-sensitive assets, if the worrying surge in Covid-19 cases prolongs.

With coronavirus infections in France surging by a record 16,096 on Thursday and hospitals filling up with seriously-ill Covid-19 patients in the Spanish capital of Madrid, there is a distinct possibility that economically devastating restrictions will be tightened in the near-term.

In fact, high-frequency data reflects a notable slowdown in all three mobility metrics – walking, driving and transit – across Germany, Spain, Italy and France, which suggests that local residents are pre-emptively scaling back their everyday activities in light of the Covid-19 “second wave”.

EU Mobility Trends (YTD)

EUR/USD Rates May Extend Slide Lower on Covid-19 Second Wave Fears

Source – Apple Mobility Data

This marked reduction in overall mobility could stunt the progress of the Euro-zone’s economic recovery from the March doldrums and may continue to drag on market sentiment, given the IHS Markit Eurozone Composite PMI for September showed that the services sector recorded its largest contraction in output since May.

Moreover, the widening of the risk-gauging yield spread between Italian government bonds and German bunds seems to have coincided with not only the EUR/USD exchange rate’s recent spike lower, but also the marked increase in Covid-19 infections.

With that in mind, local coronavirus developments may dictate the short-term outlook for EUR/USD and could intensify the exchange rate’s 3-week slide from the yearly high set on September 1.

Italian-German Yield Spread vs EUR/USD (YTD)

EUR/USD Rates May Extend Slide Lower on Covid-19 Second Wave Fears

Italian-German yield spread daily chart created using TradingView

EUR/USD Daily Chart – Head and Shoulder Neckline Break Hints at Further Downside

From a technical perspective, EUR/USD rates look poised to extend their slide lower after breaking below the neckline of a bearish Head and Shoulders reversal pattern and slicing through the trend-defining 50-day moving average (1.1715).

However, with the RSI swerving away from oversold territory and support at the 38.2% Fibonacci (1.1626) holding firm, a topside push could be in the offing.

That being said, inability to break back above the psychologically pivotal 1.17 level would probably validate the downside break of the Head and Shoulders pattern and could inspire a more sustained pullback, with the implied measured move suggesting price could slide back to the sentiment-defining 200-DMA (1.1375).

Conversely, a daily close back above the July 27 swing-low (1.1698) could encourage would-be buyers and potentially signal the resumption of the primary uptrend, with a breach of resistance at the 21-DMA (1.1774) bringing the yearly high (1.2011) into focus.

EUR/USD Rates May Extend Slide Lower on Covid-19 Second Wave Fears

EUR/USD daily chart created using TradingView

EUR/USD BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -12% -2% -7%
Weekly -15% 24% 6%
What does it mean for price action?
Get My Guide

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Daniel Moss
Improve your trading with IG Client Sentiment Data
Get My Guide

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES