The US dollar remained weak amid a liquidity thinned last week. The weaker Greenback signals the risk-on bias in the market and despite COVID accelerating across key economies, positive vaccine news has underpinned bullish momentum.
The appears to be heading toward a test of 1.20 and traders now wonder whether the 1.20-handle could be the limit.
Bearing in mind that the euro’s rise results from investor’s shift out of the safe-haven USD into more risky assets such as the euro, the current uptrend is on shaky ground.
Furthermore, the European Central Bank does not want to see the pair above that level for fear a strong currency would damage the Eurozone’s economic recovery. Before the ECB could attempt to talk down the euro on their meeting next week, a consolidation is more likely than a break of 1.20.
Meanwhile, Brexit negotiations drove the lower against the euro while managed to remain above 1.33. Yet another week passed with the U.K. and European Union failing to find a common ground. The chances for the U.K. leaving without a deal appear to be rising, with time quickly running out. A disorderly Brexit could end up inflicting more lasting damage than the pandemic according to economists.
Key events coming up this week
Federal Reserve Chairman Jerome testifies before Congress on Tuesday and Wednesday.
The US on Friday is expected to show more Americans headed back to work in November, though at a slower pace than last month.
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