The US Dollar continued its broad-based rampage today as the EURUSD pair has been forced below the 1.1000 price level on the day. Traders seem to be using the US Dollar as a safe-haven as the world’s wealthiest nations trigger mass lockdowns and restrictions on work-related and social gatherings on a scale not seen in decades.
The Euro caved in after the ECB failed to add significant stimulus beyond its September 2019 packages, while the US Fed Reserve doubled down with a three-pronged stimulus package that included a rate cut and a restart of QE. Traders seem to be rewarding the US Dollar and punishing the Euro as a result.
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Technical Outlook for EURUSD
The EURUSD is now 0.62% lower on the day (as at the time of writing), with price now challenging the support at 1.09421 (where previous lows of 12 September and 8 October 2019 were seen). Below this level, the previous lows of 30 September and 1 October 2019 form a support level at 1.08441. A breakdown of the 1.09421 support level is required to attain the new support.
On the flip side, a bounce from the current support level targets the lows formed by the double bottom of 14 November and 29 November 2019, which is also where the lows of 20 January 2020 are found. This price level (1.09932) was previous bounce level off the trendline support of October 2019 to Jan 2020 on 29 November low. It will switch roles to function as new resistance. 1.10630 will prove to be a useful resistance level if the bounce takes the EURUSD above 1.09332. However, the bias in the market supports USD strength, and therefore any price recovery may be an opportunity to sell on rallies.
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