The EURUSD saw some pressure trading below 1.1704 yesterday and currently trading at 1.171.
The pressure experienced during yesterday’s trading session was a mainly due to the fact that there was an increased number of hospital admissions across the EU and with the high possibility of further restrictions being implemented by the government.
This second wave of Covid-19 cases has tremendously hampered the EU’s economic recovery plan thereby causing dramatic pressure on the Euro.
On Thursday, France reported an additional 30,000+ cases, up from 22,000 the day previous. Italy, Poland, and Germany all recorded their largest daily rise in Covid-19 infections.
We also saw report yesterday that Johnson & Johnson paused their Covid-19 vaccine trial due to an unexplained illness in one of the patients causing traders to abandon their risk asset and move on to a more safe haven assets.
Furthermore, Boris Johnson is set to announce his decision on whether he will continue negotiating with the EU on a post-Brexit trade deal.
There’s also reports coming out that the British negotiator,David Frost mentioned that the EU is no longer committed to working towards an agreement, so all eyes are on Prime Minster Boris Johnson’s decision today.
Will he pull the plug on the deal?
And, how will all these news affect the market?
Let’s look at the main focus of today, the Dollar Index.
The US Dollar Index is currently trading at key resistance line at 93.78. Right now, we see the market is slowing down in anticipation of EU session.
A break above this resistance line could mean a dramatic drop across riskier assets as traders will look to increase their demand for safe havens. This could lead to the US dollar index moves to the price level of 94.72
This will further lead us to the EURUSD pair.
Which is currently trading at 1.171. As mentioned earlier, the main attention today will be on Dollar Index, and a break above the negative trend line will push the EURUSD towards the swing lows at 1.1650.
The more cases of Covid-19 increasing to higher hospitalization rate in EU could cause more surge on the Index causing extra pressure on the EURUSD.
Furthermore, if Boris Johnson pulls the plug on the Brexit deal and any other negative news regarding the US stimulus, we would experience furthermore pressure on the riskier assets.