EUR And USD Adds Over 30 Pips As Risk Assets Gain Ground

EUR/USD adds over 30 pips as risk assets gain ground

• EUR/USD trades at 1.1959 versus 1.1923 in early Asia. 
• Corona virus vaccine optimism and buoyant equity markets weigh over the dollar. 
• Fed's Powell says the US economy remains in a damaged state.

The bid tone around the single currency strengthened on Tuesday, pushing EUR/USD higher, as stock markets gained, weakening safe-havens such as the greenback. 

The pair traded near 1.1959 at the time of writing, representing a 0.30% gain on the day, having found buyers near 1.1923 in Asia. 

Vaccine hopes boost risk appetite

Major Asia indices rose over 1% on prospects of a COVID-19 vaccine. Drugmaker Moderna said Monday that it will apply for the US and European emergency authorization for its COVID-19 vaccine, with full results from its late-stage study showing 94.1% effectiveness with no serious safety concerns. 

Last month, drugmakers Moderna, Pfizer, and AstraZeneca announced positive results of their respective experimental vaccines, putting a strong bid under the risk assets. Since then, a massive wave of liquidity has come into equities, as noted by Reuters, weakening demand for anti-risk assets such as the US dollar. 

The trend looks set to continue, as markets believe the Federal Reserve would boost stimulus to counter the recent resurgence of coronavirus. "Recent news on the vaccine front is very positive for the medium term," Powell said in testimony released Monday while adding that the economy remains in a damaged and uncertain state. 

As such, the EUR/USD pair could have another go at the psychological hurdle of 1.20. The bulls failed to establish a foothold above that level on Monday on month-end dollar demand. 

Data wise, the focus would be on the German labor market report and Eurozone's preliminary Consumer Price Index for November. A big beat on expectations will likely draw more substantial buying pressure for the common currency. 

• ECB should lengthen QE purchases to counter strong euro – IIF

Technical levels

EUR/USD

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Dollar Down, With COVID-19 Worries Overshadowing Prospect of Vaccine

Investing.com – The dollar was down on Monday morning in Asia, with optimism over a potential early rollout of COVID-19 vaccines offset by global economic restrictions to curb the spread of the virus.

The U.S. Dollar Index, which tracks the greenback against a basket of other currencies slipped 0.34% to 103.145 by 12:12 AM ET (4:12 AM GMT).

The FDA is looking to grant approval in mid-December for distribution of BNT162b2, the vaccine candidate produced by Pfizer Inc (NYSE:PFE) and German partner BioNTech (F:22UAy), chief scientific adviser for “Operation Warp Speed” Moncef Slaoui said. The first people in the U.S. could be inoculated a day after the approval.

The U.K. could also grant regulatory approval to BNT162b2 this week.

However, millions of Americans are expected to flout warnings to stay home for the upcoming Thanksgiving holiday, raising fears that the mass movement could increase the number of second wave cases in the country exponentially. Across the Atlantic, Germany, dealing with its own second wave, could see its current lockdown extended until mid-December.

The lack of consensus in the U.S. Congress concerning a deal on the latest stimulus measures has also led to speculations that the Federal Reserve could ease monetary policy even further. The spat between the Fed and the Treasury Department over the termination of some emergency lending programs during the previous week also fed this speculation.

The minutes of the Fed’s last policy meeting, to be released on Wednesday, will now be scrutinized for confirmation that Fed policymakers discussed adding to the central bank’s asset-buying plans.

“The minutes should help gauge whether our call for a lengthening of the maturity mix as soon as the December meeting remains on track,” TD Securities analysts said in a note.

The AUD/USD pair lost 0.59% to 0.5763 and the NZD/USD pair X X% to X

The USD/CNY pair X 0.05% to 7.0983 and the GBP/USD pair gained 0.13% to 1.1656

The USD/JPY pair was down 0.6% to 110.14. Japanese markets are closed for a holiday, resulting in sparse liquidity and investor reluctance to test major chart barriers on several dollar pairs.

Meanwhile, the euro edged up against the dollar, but continues a struggle to break above the $1.993 resistance level that it also failed to breach during the previous week.

However, some investors remain bullish on the single currency’s longer-term outlook.

“We think that the exchange rate will rise further over the next few years against a backdrop of lower euro-zone stability risks; an increased real yield gap between the euro-zone and the U.S.; and a continued recovery in the global economy,” Capital Economics analysts said in a note.

The note also raised its forecasts for the euro, now seeing it at $1.2500 by the end of 2021 and $1.3000 at the close of 2022, against the previous $1.2000 and $1.2500 respectively.

European Markets Seen Mixed; New U.S. Relief Package Just Delayed?

Investing.com - European stock markets are seen opening mixed Wednesday, as investors digest the news that President Donald Trump has ended negotiations over a new coronavirus aid package.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.9% higher, CAC 40 futures in France fell 0.2% and the FTSE 100 futures contract in the U.K. was flat. 

President Donald Trump ended talks on Tuesday with Democrats on a new stimulus package for his pandemic-hit country, tweeting that after he wins the presidential election in November “we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.” 

Forex Trading Understanding...

Forex is a portmanteau of foreign currency and exchange. Foreign exchange is the process of changing one currency into another currency for a variety of reasons, usually for commerce, trading, or tourism. According to a recent triennial report from the Bank for International Settlements (a global bank for national central banks), the average was more than $5.1 trillion in daily forex trading volume.