EUR / USD settles near month-long lows at 1.1640

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  • The euro finds support at 1.1640 after a five-day sell-off.
  • The COVID-19 lockdowns and the ECB have brought the euro down.
  • The US elections will be a key driver for the EUR / USD next week.

The euro It extended its downtrend for the fifth day in a row and is on track for a weekly drop of 1.75% to close the week near 1.1640 with multi-month lows in sight at 1.1610.

ECB lockdowns and COVID-19 make the euro fall

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The euro has been hit this week by market concerns about the rise in COVID-19 infections in Europe and the effect of social distancing measures to curb them. The new blockades introduced by France and Germany and the stricter limitations applied in Italy and Spain are raising the alarm about the impact on the fragile economic recovery.

Beyond that, the ECB hinted on Thursday the possibility of unleashing new stimulus measures in December to counter the negative impact of the pandemic, which fueled the negative impact on the common currency.

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On the other hand, the risk aversion sentiment caused by the increase in coronavirus infections in Europe and the US and the uncertainty about the outcome of the US elections have favored the dollar as a safe haven, which rebounded to highs of four weeks in front of a basket of coins.

Next week, the US presidential election will be the main event. The market is pricing in a Biden victory that could push the dollar lower, anticipating the approval of a large stimulus package by the Democratic government. However, a contested election would increase uncertainty and boost demand for dollars in a race for safety.

Credits: Forex Street

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