The euro has closed within 5 pips of 1.1855 for the last three days as the market struggles to focus on a single theme. The whippy range trading is likely to continue until investors decide whether they should be hopeful for the future due to positive coronavirus vaccine trials, or fearful of the present due to the spike in COVID-19 infections nL1N2I40XJnFWN2I410U.
The European and U.S. economies are likely to falter in the short term as governments lock down to try and control the rampant spread of the virus, as the northern hemisphere heads into winter.
The U.S. economy is also at risk due to the political gridlock in Washington D.C. as President Donald Trump refuses to concede nL1N2I407E.
Officials at the Federal Reserve including Chairman Jerome Powell have repeatedly noted the urgent need for more fiscal stimulus nL1N2I325T.
EUR/USD sentiment turned bullish after the U.S. election, but repeated failures to push above 1.1900 might be discouraging longs. The pair might fall in the short term due to uncertainty over coronavirus-related lockdowns and delays to U.S. fiscal stimulus.
But the weakness will likely be limited, as the market prices in more Fed easing in December to offset the lack of fiscal support.
EUR/USD technical support lies at 1.1720/35 where the 61.8 Fibonacci retracement of the Nov 4-9 rise converges with the 100-day moving average.
Dips towards that window should be viewed as a buying opportunity.
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