EUR/USD Outlook: Euro Battles Support, ECB May Signal December Action
EUR/USD Price Analysis & News
US Dollar Safe-Haven Flows Weigh on Euro
The risk-off tone seen in yesterday’s session had seen firm demand in the dollar index as renewed COVID concerns dampened sentiment. In turn, the Euro had been on the backfoot testing support at the 1.1800. Among the key drivers behind the recovery in the Euro has begun to fade with the growth outlook moving in favour of the US over the Eurozone with the latter being hampered by fresh lockdown measures to curb the second wave of COVID cases. Alongside this, the Chinese Yuan is also seeing more two way risks with the PBoC cutting the Yuan fix to slow down the currency’s appreciation, which in turn has also put some pressure on the Euro.
ECB May Signal December Policy Action
The ECB will be in focus for the Euro this week and with the outlook deteriorating for the Eurozone, there is rising expectations that ECB’s Lagarde will signal the need for addition monetary policy meeting at its December meeting. As it stands, Bloomberg estimates are for an additional EUR 500bln to its stimulus programme, which can be extended until the end of next year.
EUR/USD: Near-term supports resides at 1.1795-1.1800, which also coincides with the 55DMA. A break below, leaves the door open to 1.1750, while on the topside, resistance sits at 1.1835-40 before 1.1850. However, while the growth outlook has darkened for the Eurozone, the Euro will likely take its cue from the outcome of the US election as well as COVID vaccine results in the next few weeks.
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