Risk-taking remained subdued during the Asian session as traders had doubts about the COVID-19 vaccine progress.
Will London session traders continue to exercise caution?
Here are the major headlines from the last couple of hours:
Fresh Market Headlines & Economic Data:
- Fed head Powell hinted at new lending programs in the works
- Fed policymaker Rosengren: Unemployment likely to remain in double-digits at year-end
- Japanese core machinery orders down by 0.4% vs. expected 6.8% slide
- Australia to relax some domestic travel restrictions
- Australia’s MI leading index down 1.5% after earlier 0.7% dip
- RBA skipped QE gov’t bond buying for the day
- Trump signed order to direct federal agencies to cut regulations
- Conflict between U.S. and Iran also weighing on risk-taking
- China keeps benchmark rate unchanged, suggests easing pause
- Asian shares dip as report questions Moderna’s vaccine trial results
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. headline and core CPI at 7:00 am GMT
- Eurozone current account balance at 9:00 am GMT
- Eurozone final headline and core CPI at 10:00 am GMT
- Canadian CPI at 1:30 pm GMT
- BOE Governor Bailey’s speech at 2:30 pm GMT
What to Watch: EUR/USD
EUR/USD just hit resistance at the top of its range around 1.0975 and might be setting its sights back on support at 1.0775.
Apart from fading optimism on the Franco-German stimulus proposal, traders also seem to be doubting the clinical trials of Moderna’s coronavirus vaccine.
If London session traders stay in this kind of mood, EUR/USD could soon resume the slide back to the bottom of its range.
Only the current account balance and final CPI readings are due from the eurozone today, leaving traders to price in expectations for the release of the FOMC minutes much later in the day.
Of course, any updates on aid packages for the eurozone could still spur an upside breakout for the pair, possibly resulting in a rally that’s the same height as the rectangle pattern.
Just make sure that you look at the average EUR/USD volatility when setting entries and exits!
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