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EUR / USD cannot recover and falls back below 1.1700 consolidating weekly losses

  • The euro, unable to stay above 1.1700 against the US dollar, turns negative.
  • DXY erases losses, consolidates significant weekly gains backed by risk aversion.

The EUR/USD is about to test the weekly low as stocks resume their Wall Street slide. The resurgence of risk aversion boosted the US dollar across the board. The pair posted a new daily low at 1.1658 and is under pressure, looking at the 1.1650 area.

The DXY rebounded higher and is now approaching 94.00 as the Wall Street indices failed to sustain modest gains. The Dow Jones lost 1.74% and the Nasdaq 2.90%.

Risk aversion appears to be the key factor in the recent rebound in dollar strength. Additionally, analysts point to month-end flows as the reason for those gains. The dollar is approaching recent highs and is consolidating strong weekly gains across the board.

US economic data released on Friday was better than expected, but did not help offset the current tone in financial markets, dominated by caution ahead of the US presidential election and amid rising concern about the impact of the spread of the coronavirus.

From a technical perspective, the EUR / USD is moving towards the key support at 1.1650. The mentioned area is not only the weekly low but also the 20-week moving average. Below that level, attention will turn to the September low near 1.1610. The negative tone continues to prevail in the short term, while in a broader perspective, it moves sideways in a wide range between 1.16 and 1.1870.

Credits: Forex Street

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