Eurozone coronavirus cases are on the rise, prompting additional restrictions across the old continent while US fiscal stimulus talks are going nowhere fast. The EUR/USD pair reflects these developments as seems to have mark a top at 1.1830. Terence Wu, FX Strategists at OCBC Bank, sees the world’s most popular currency pair heading towards 1.17.
“Market participants, especially the equity guys, may finally price out the odds of US fiscal stimulus in the coming weeks. This should put a pause on any risk-on bias as the market runs out of positives for now. Moreover, the virus situation in Europe continues to worsen. Do not rule out a more defensive tilt as we approach the US elections, providing some support for the USD.”
“A near-term top may have been seen at around 1.1830, as the focus in Europe shifted to the containment of the second-wave virus spread.”
“Expect the EUR/USD pair to be implicitly heavy for now, with risk-reward likely tilted in favour of 1.1700.”