Daily Market Recap - EURUSD Bounces off weekly lows

The Euro staged a late comeback against the US Dollar after initially digging towards a new weekly low around the 1.1815 level earlier in the day. The Euro was met with strong selling pressure after the recent optimism around the covid-19 vaccine was overshadowed by rising infection numbers and dovish statements by the European Central Bank.

The abrupt late-session reversal seems to have been triggered by the announcement by US Senate Democratic minority leader Chuck Schumer that Senate Republican majority leader Mitch McConnel has agreed to a resumption in talks on another covid-19 relief package.

Markets welcomed the news with US equities bouncing back into positive territory and crude oil edging higher for the day as well. The timing of the announcement came right on time for EURUSD bulls as investors started to shrug off the vaccine optimism in light of the worsening pandemic figures in the US and Europe.

There is no solid idea yet of how large the stimulus deal will be as Democrats are pushing for a big 2 trillion Dollar package whereas Republicans want a much smaller figure, expected to be around 500 billion. Regardless of the amount, the move should stimulate risk appetite and likely weigh on the US dollar thus, in turn, favoring the Euro in the short term.

Meanwhile, the US is not alone in discussing relief packages as Eurozone leaders are also poised to enact another monetary stimulus bill which should put some pressure on the upside potential on the Euro. EU nations are however at loggerheads over a clause in the recovery bill whereby funds may be denied to nations if certain democratic standards are not met (Hungary and Poland being the obvious targets).

From a technical perspective, momentum in the EURUSD remains up on the daily chart despite showing signs of weakness today. If the pair continues at its current rate, the resistance at 1.19 may come into play in the coming sessions with the ultimate target being the 1.196 September highs. The likely range in the EURUSD is now 1.1815 to 1.19.

(Chart Source: Tradingview 19.11.2020)

On the downside, bears will have to force a close below the 1.185 pivotal level in the coming session for there to be a credible shot at testing the 1.18 psychological mark. Should sellers manage to regain control and drive prices past that point, the 20-day MA around 1.1791 should put up stiff support in the short run.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.