EUR/USD tumbled on Wednesday as risk aversion emanating from European coronavirus restrictions and U.S. election uncertainty put bulls on the run, ending a consolidation phase and increasing the chances of deeper losses.
Before the break lower, EUR/USD had been consolidating gains from the rally off the Oct.
15 low and threatening to rally above the 61.8% Fibo of 1.2014-1.16125.
But the return of severe German and French pandemic restrictions nL1N2HJ0QL threaten the fragile euro zone economic recovery, while potential U.S. election uncertainty -- including a possible contested result nL1N2HI0YT -- are adding to safe-haven flows.
German yields took a particularly hard hit as investors snapped up government bonds, increasing the dollar's yield advantage.
EUR/USD fell from the 55-day moving average and daily cloud top and pierced the 10- and 21-day moving averages, breaking the rising channel base on daily charts.
Daily and monthly RSIs indicate bearish momentum, and the 23.6% Fibo of 1.0636-1.2014 and September monthly low are now in play.
Options indicate investors expect EUR/USD downside.
EUR/USD risk reversals EUR1MRR=FN show 1-week and 1-month vol premiums for calls exceed puts while 3-month call premiums are close to zero.
For more click on FXBUZ
eur/usd Click here