EUR/USD is suffering the pick-up in the risk aversion sentiment among market participants, coming under exacerbated downside pressure and recording fresh multi-week lows in the proximity of 1.1730 at the same time.
This apparent change of heart towards the greenback seems sustained by rising concerns over the advance of the pandemic, US political uncertainty, and the less clear scenario surrounding extra stimulus measures by the Federal Reserve.
On Tuesday, investors are expected to closely follow the first testimony by Chief Jerome Powell on the Fed’s response to the pandemic ahead of two other testimonies on Wednesday and Thursday. The dollar will, therefore, be under the microscope practically during the whole week.
Adding extra downside pressure to EUR/USD, ECB’s Christine Lagarde said on Monday that the central bank will be “attentive” to the appreciation of the single currency, diluting somewhat her comments at the latest ECB meeting, when she suggested market participants not to overreact to the (by then) appreciation of the euro.
Considering the recent price action, it seems that further downside in EUR/USD looks like a probable scenario in the short-term horizon. That said, the next relevant contention area emerges in the 1.1700 neighborhood, considered as the lower bound of the August-September range. On the other hand, bullish attempts now low somewhat out of favor, although they should meet strong resistance in the 1.19 zone.
EUR/USD LONG (Buy)
ENTER AT: 1.17380