EUR/USD Technical Analysis: Fresh Attempts for Upward Correction

fxfarmerashik · October 21, 2020

After a harsh week in which the EUR/USD was exposed to downward momentum, pushing it towards the 1.1688 support, and with the start of this week’s trading, the pair tried to rebound higher with gains to 1.1793 before settling around the 1.1775 level at the time of writing.

However, TopAsiaFX has stated that attempts to rebound lacked strong momentum to stabilize above the 1.1800 resistance, and the efforts of the Euro are hindered by concerns about the strength of the second wave of the Corona pandemic and the measures of European countries to contain the outbreak of the deadly disease.

These restrictions directly affect the European economy, which is still suffering from the consequences of the first wave.

At the same time, and with these concerns, the European Central Bank monitors the economic performance of the bloc to determine its appropriate policy.

In this regard, European Central Bank Executive Board member Yves Mersch said yesterday that policymakers will carefully examine the economic data received before the next policy session to ensure that the impact of coronavirus containment measures is not repeatedly considered in light of extremely unstable expectations.

“Looking to the future, in the current environment of high uncertainty, the European Central Bank’s Governing Council will carefully evaluate the information received, including developments in the exchange rate, while ensuring that this information received, such as information related to containment measures that were included already at our baseline, were only counted once in our assessment.”

He also said that the economic recovery in the Eurozone remains incomplete and prone to setbacks. The policymaker emphasized that the Board of Directors continues to prepare to adjust all its tools, as appropriate, to bring inflation back to its target level.

The UK is leading European efforts to contain the pandemic. As authorities across the UK impose new restrictions on business and social interactions as COVID-19 infections are soaring in all age groups, where parts of the country’s hospital beds and intensive care wards are filling up.

One of their main goals is to reduce the pressure on the NHS ahead of the winter flu season. In this regard, public health experts say that the lockdown could help reset the epidemic to a lower level, giving doctors time to treat patients and providing breathing space for the government to improve its response.

Britain has the most serious outbreak of the Coronavirus in Europe, with more than 43,700 confirmed deaths.

According to the technical analysis of the pair: We are still waiting for the EUR/USD to stabilize above the 1.1800 resistance, for an opportunity for a stronger correction upwards, and we expect the pair to remain stable between the 1.1660 support and the 1.2000 psychological resistance for a period of time, as shown on the daily chart.

The psychological resistance at 1.2000 brings condemnation from monetary policy officials at the European Central Bank, as the Euro’s high exchange rate harms the European economy, which depends on exports at a time when it suffers from the effects of the pandemic. At the same time, the 1.1660 support raises buying interest among currency traders.

As for the economic calendar data, today: The German producer price index will be announced, then the Eurozone’s current account will be released. During the American session, building permits and the housing starts in the United States will be announced.