- EUR / USD turns negative after hitting 2-month highs.
- The ECB minutes indicate that the recovery in the region has lost traction.
- German consumer confidence deteriorates in December.
Sellers have made a comeback after hitting new recent highs and have dragged the EUR / USD pair below the 1.1900 level Thursday.
EUR / USD weaker after pessimistic ECB
EUR / USD falls back into negative territory in the second half of the week after two consecutive daily uploads and despite reaching new highs in the region of 1.1940 / 45 earlier in the day.
The resurgence of concerns about the relentless advance of the coronavirus pandemic and its impact on global growth prospects It appears to have returned to investors’ minds, simultaneously overshadowing recent optimism about possible vaccines and a less uncertain US political landscape.
Furthermore, the minutes of the ECB meeting highlighted that the economic recovery has lost momentum in the fourth quarter and has reiterated that growth risks remain sloping to the downside. In addition, members are expected to closely follow the data and exchange rate performance while turning their attention to the fiscal front.
Furthermore, P. Lane from the ECB has said that the path to The recovery in the region remains long and fraught with risks and has warned of a longer-than-projected period of lower inflation.
As for the eurozone data, German consumer confidence measured by GfK fell to -6.7 points in December. Returning to the ECB, the M3 money supply expanded at an annualized 10.5% in October and loans to the private sector increased 3.1% over the previous year.
What can we expect around the EUR?
EUR / USD rose again above the 1.19 level amid sentiment favorable to risk appetite. In the very short term, EUR / USD appears supported by the prospects for a strong recovery in the region coupled with the increasing likelihood of additional stimulus in the US Risks to this positive outlook stem from possible political effervescence around the EU Recovery Fund and the growing chances of further easing measures being announced by the ECB as early as the December meeting.
EUR / USD levels
At the time of writing, the EUR / USD pair is shedding 0.12% on the day, trading at 1.1896. Immediate support is at 1.1800 (Nov 23 low), followed by 1.1745 (Nov 11 low) and 1.1709 (Fibonacci level of the 2017-2018 move). On the upside, a break above 1.1941 (Nov 26 high) would target 1.1965 (Aug 18 high) en route to 1.2011 (Sept 1 high).
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