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Nov 16 - 11:55 AM

EUR/USD - COMMENT-Price-Action, ECB Should Concern EUR/USD Bulls

By Christopher Romano  —  Nov 16 - 09:35 AM

The report from Moderna MRNA.O saying their experimental vaccine is 94.5% effective nL8N2I233V is rallying risk assets, but EUR/USD longs should be concerned as price action and ECB comments suggest the upside will be limited.

The ECB seems to be growing more concerned with euro strength and recent chatter regarding that strength has increased.
The rhetoric was upped again today as ECB policymaker DeCos said foreign exchange moves between the dollar and euro are something to worry about nS0N2HG003.

Today's upbeat vaccine news, combined with Pfizer's vaccine news last week, is putting upward pressure on U.S. interest rates.
Treasury yields are lifting, while eurodollar prices are trading heavy as the vaccine news casts doubt on investor’s expectations for additional Fed stimulus.

Indeed, EUR/USD's price action suggests longs should be concerned.
EUR/USD rallied overnight, but it has since given back those gains and is now trading lower on the day.
As a result of this price action, the daily RSI diverged on the 5-day high and a daily doji candle has formed.
Both signs suggest the rally off the November 11 low could be complete, and that a move lower could be in the cards.

Monthly techs remain bullish, which suggests EUR/USD could rally in the longer-term.
However, for now, a 1.1600-1.2000 range may prevail into year-end.

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Source:
Refinitiv IFR Research/Market Commentary

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