EUR/USD Daily Forecast – Test Of Support At 1.1695

EUR/USD Video 16.10.20.

Virus Worries And Messy Brexit Negotiations Put Pressure On Euro

EUR/USD is currently trying to settle below the nearest support level at 1.1695 as worries about Brexit and Europe’s problems with coronavirus put pressure on the euro.

EUR/USD traders continue to closely monitor news about Brexit negotiations. While both UK and EU appeared to be ready to continue negotiations, EU stated that Britain should make additional concessions or face a no-deal Brexit.

At this point, it is not clear whether this is a negotiation tactic or a serious threat from EU. Just like EUR/USD, GBP/USD was under pressure yesterday but the market is not pricing in a no-deal Brexit.

In addition to Brexit news, EUR/USD traders will have to closely monitor the situation on the coronavirus front in the next few weeks. Yesterday, France reported more than 30,000 new cases, which was its all-time record. Infections are also surging in UK, Italy, Belgium and other European countries.

For now, European governments have managed to avoid full lockdowns which will be devastating for the economy. However, if the number of COVID-19 patients in intensive care units continues to increase, they may have no choice but to close the economy again which will be bearish for EUR/USD.

Technical Analysis

EUR/USD is trying to settle below the nearest support level at 1.1695. If this attempt is successful, EUR/USD will head towards the next support near September lows at 1.1630.

A move below the support at 1.1630 will push EUR/USD towards the next support level at 1.1580. In case EUR/USD gets below 1.1580, it will move towards the support at 1.1540.

I’d note that there are no serious levels between 1.1630 and 1.1500 so EUR/USD may gain strong downside momentum and ignore the above-mentioned levels in case significant negative catalysts emerge.

On the upside, the nearest significant resistance level for EUR/USD is located at 1.1750 although it may also face some resistance at 1.1720. A move above 1.1750 will open the way to the test of the next resistance at 1.1780. If EUR/USD manages to settle above this level, it will head towards the resistance at October highs at 1.1830.

For a look at all of today’s economic events, check out our economic calendar.