Saturday, November 28

EUR/USD retreats to 1.1630 area following a modest rebound

  • EUR/USD pair is falling for the sixth straight trading day.
  • US Dollar Index clings to daily gains above 94.00.
  • Manufacturing PMI data from US showed ongoing expansion in the sector.

After losing more than 200 in the aftermath of the European Central Bank’s (ECB) dovish shift last week, the EUR/USD pair struggled to stage a meaningful rebound on Monday. As of writing, the pair was down 0.14% on the day at 1.1631 and was on track to post its lowest daily close in nearly five weeks.

Following the October monetary policy meeting, Christine Lagarde, President of the ECB, said that the ECB will be taking action in December and caused the shared currency to come under pressure against its rivals. Additionally, the surging number of coronavirus cases in Europe forces governments to take drastic actions and further weighs on the EUR.

On Monday, Italian Prime Minister Giuseppe Conte said that they will start setting nightly curfews in the country and German Chancellor Angela Merkel noted that they are likely to limit contacts between people in private for all winter months.

Eyes on US presidential election

On the other hand, the greenback preserves its strength ahead of the presidential election in the US and makes it difficult for EUR/USD tp erase its losses. The US Dollar Index, which gained more than 1% last week, is currently up 0.28% on the day at 94.14. Investors are likely to remain focused on the election polls in the remainder of the day.

Previewing this critical event, “Florida may give an early victory for Biden  Pennsylvania may give Trump four more years – or trigger contention,” said FXStreet analyst Yohay Elam. “North Carolina is the most critical state for the Senate. However, there is room for surprises – and for the elections to drag.”

Earlier in the day, the data published by both the IHS Markit and the ISM showed that the business activity in the US’ manufacturing sector continued to expand at a robust pace in October.

Technical levels to watch for

Credit: FX Street

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