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James Hyerczyk

The Euro is trading lower against the U.S. Dollar on Monday after giving back earlier gains. The single-currency soared initially after Joe Biden clinched the U.S. presidency and Pfizer Inc said its experimental vaccine was more than 90% effective in preventing COVID-19.

A Biden presidency is expected to boost international trade relations and the prospect of a successful coronavirus vaccine is seen as a major tailwind, with global cases continuing to rise.

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At 15:22 GMT, the EUR/USD is trading 1.1856, down 0.0033 or -0.28%.

U.S. Treasury yields rose on the Pfizer news, helping to stabilize the U.S. Dollar. Any further rise in Treasury yields could help the dollar extend its gains, putting pressure on the Euro.

In other news, German exports rose by more than expected in September, and foreign trade gave Europe’s largest economy a boost going into the fourth quarter as it struggles to avoid slipping into a double dip contraction.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous main top at 1.1917.

The next upside target is the September 1 main top at 1.2011. The main trend changes to down on a trade through 1.1603. This is highly unlikely, but due to the prolonged move up in terms of price and time, the EUR/USD may be ripe for a potentially bearish closing price reversal top.

The short-term range is 1.2011 to 1.1603. The EUR/USD is currently trading on the strong side of its retracement zone at 1.1855 to 1.1807, putting it in a bullish position. This zone is also support.

The new minor range is 1.1603 to 1.1919. Its retracement zone at 1.1761 to 1.1724 is a potential downside target. Since the main trend is up, buyers could come in on a test of this zone.


Short-Term Outlook

Given the sharp rise in the EUR/USD since November 4, the EUR/USD may be ripe for a closing price reversal top. Therefore, last Friday’s close at 1.1875 is controlling the direction of the single-currency.

Bullish Scenario

A sustained move over 1.1875 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to retest the intraday high at 1.1919. This is a potential trigger point for an acceleration to the upside with 1.2011 the next likely target.

Bearish Scenario

A sustained move under 1.1875 will signal the presence of sellers. The first downside target is the Fibonacci level at 1.1855. If this fails as support then look for a possible break into the 50% level at 1.1807.

The 50% level at 1.1807 could be the trigger point for an acceleration to the downside with 1.1761 to 1.1724 the next major downside target.

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

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