Risks Weigh On The Euro
We are seeing continued selling of the major currency pair early in November. EUR/USD is balancing around 1.1640, while European lockdowns and the presidential elections in the USA put additional pressure on the asset. So, with elections in the US tomorrow and their result still quite unclear, it seems like market players are frightened by both possible scenarios: the first with Donald Trump’s staying in the White House and the second with Joe Biden’s taking his place. Both of the candidates imply a lot of risks, which are clearly seen by investors. Starting Monday, Germany is introducing several quarantine restrictions, so-called a “soft” lockdown. France is supposed to be the next. Both countries are facing an extremely shocking second wave of the COVID-19. The restrictions are intended to slow down the coronavirus spread rate and decrease the load on the healthcare sector. However, governments of these countries should be very careful with details: in both scenarios, economies are looking rather unstable and may be damaged yet more. The euro is currently facing too many risks, including macroeconomic data, which is showing a possible economic slowdown. In the H4 chart, EUR/USD has completed the descending wave at 1.1650; right now, it is forming a consolidation range around this level, which may be considered as a downside continuation pattern. If later the price breaks this range to the downside, the market may continue trading within the downtrend with the short-term target at 1.1425. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is still moving inside the histogram area, thus allowing the asset to continue its decline.
As we can see in the H1 chart, after breaking 1.1650 to the downside, EUR/USD may continue falling towards 1.1600. After that, the instrument may return to test 1.1650 from below and then form a new descending structure to break 1.1600. later, the market may continue to continue the downtrend with the target at 1.1500. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving below 50, thus implying further downtrend.
Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForexDisclaimerAny forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.