EUR/USD week 44

EUR/USD was holding up ok not long ago after breaking down in September, but the recent channel was snapped and with it another wave of selling looks to be underway. A breakdown below 11612, a lower low from last month, will have in play the support zone from just under 11500 to around 11375. The 200-day is rising up not too far below there, currently at 11313. Also, a possible form of support on further weakness could be the lower parallel tied to the trend-line of the August high; this line clocks in around the 11500-mark, or the March spike-high. While a big down-move may not develop, it does appear we will see more selling in the sessions ahead to at least the aforementioned levels. To flip the script towards a long bias we will need to see some work done before gaining any clarity and conviction.

The euro extended losses to touch a four-week low of $1.1657 on Thursday afternoon, after ECB President Christine Lagarde said that rising COVID-19 cases and new restrictive measures have led to a “clear deterioration” in the bloc’s near-term outlook. Still, third-quarter economic growth data might be better than expected, she said, but the fourth quarter is almost certain to be weak, with a “very negative” November. Lagarde also noted that risks are “clearly” tilted to the downside, raising expectations that the ECB will deliver more stimulus when it meets in December. The common currency was already under pressure due to concerns about the negative impact of new restrictive measures on the region’s recovery. On Wednesday, Germany and France announced new lockdown measures that will see the closure of non-essential businesses, including restaurants, bars, gyms and theatres.

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