NEW YORK, N.Y. – The EUR/USD holds steady above $1.10. The pair’s tenacity has led to bullish hopes of a rebound from this level, similar to what happened in November. Meanwhile, the dollar is getting a boost from the coronavirus outbreak.
As the EUR/USD battles to remain at this key support, swing traders might capitalize on this defensive stance. However, the hourly chart over the week has witnessed how the price remained immovable.
It was suggested on Tuesday that there was a chance a bullish wedge was on the horizon. But traders haven’t seen any upside momentum that signifies buyers regaining control. The EUR/USD price remains in limbo at the moment, with investors having no choice but to wait for either a break below $1.09 or above $1.103.
Analysts have also observed that the EUR/USD didn’t exploit the opportunity provided by the Federal Reserve’s decision to leave rates as they were. The Fed did make some subtle but meaningful changes. The body’s decision to lower its assessment on household spending and its goal to reach 2% inflation has weakened the dollar.
The EUR/USD pair peaking at around 1.1020 indicates the dollar didn’t lose much of its strength. It also appears that the currency is benefiting from safe-haven movements caused by the spread of the coronavirus.
With the death toll steadily rising and strict limitations on movement are starting to impact global growth. Stock markets are subdued as traders wait for news. And the longer the situation continues, the longer the USD stays bid.
Early trading has shown the GBP/USD sliding down to $1.2975. It’s the lows from the previous week and is near the upward moving trendline support from September. A break under will usher in the $1.277 level and endanger the bullish mood that has settled since October.
Any gains made this week were constrained to the $1.303 level. A rally would first have to clear this sector, which would in turn see it push past the 50-hour $1.3013 simple moving average (SMA).
The GBP/USD wasn’t the only pair to inch down. The USD/JPY also returned to the lows from Monday. The order of lower highs remains fixed, so traders have adopted a wait-and-see approach. If the pair breaks at about ¥108.80, it would push ¥108.30 into their sights. A rebound would mean the price will settle back at ¥109.20, which was were the gains stalled in the first place.
Markets also had a trying day, with most benchmarks in Asia seeing red. The Nikkei plummeted and ended near a key support. It must remain in this level to prevent falling further. Meanwhile, the Nifty and Sensex are keeping a tight hold above their critical supports.