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EURUSD: FX players await updates

The EURUSD pair rose 0.13% to 1.1850 on Monday, November 16. The intraday pattern looked V-shaped. In Asian trading, the DXY declined on expectations that Moderna would announce its coronavirus vaccine trial results. The euro dipped from 1.1869 to 1.1814 after trading opened in London.

Moderna became the second US company in a week to report positive Covid-19 vaccine trials. Vaccine news caused equities to spike higher yesterday. The gold price dropped to 1,864.54. The euro also buckled under downward pressure. The market showed the same reaction to the news from Pfizer on November 9. After a mild pullback, the gold price recovered to $1,896, while the euro rose to $1.1866.

Todays macro agenda (GMT+3)

16:15 Canada: housing starts (October), wholesale sales (September), foreign securities purchases (September); US: retail sales (October), import prices (October)

17:00 UK: BoE Governor Bailey speech

17:15 US: industrial production and manufacturing production (October)

18:00 US: business inventories (September), NAHB housing market index (November)

19:00 Eurozone: ECB President Lagarde speech

21:00 Canada: BoC Governor Tiff Macklem

1

Current outlook

The euro rose to 1.1867 in Asian trading this morning. The GBPUSD pair has been hovering around the 0.8975 level. Market participants await updates about which way FX currencies will move towards the end of the week. A long-term trend should not be expected at this point until there is clarity surrounding the US election outcome. Such clarity will emerge after electoral vote certification on December 14. Since Donald Trump has refused to concede defeat due to vote rigging, the odds of a second mandate look quite high (over 70%).

Biden's transition to the presidency is being blocked by the administrator of the US General Services Administration (GOS), Emily Murphy, who has said that the media is not a decree for her. Under the 1963 Presidential Transition Act, the transfer of executive power commences when the GOS recognizes one of the candidates as the winner. After that, the winning team gains access to funds (almost $10 mln to cover transition costs) as well as to documentation, and can also send its representatives to various departments.

At the time of writing, EURUSD was hovering around 1.1855. While Trump battles Biden, Brexit and the coronavirus continue to take front and center stage. According to the latest reports, David Frost announced that a deal with the EU on Brexit is possible next week. However, it appears that the British PM is not particularly concerned about this. Johnson reiterated yesterday that the UK would prosper even if it failed to strike a trade deal with the EU.

The market is now in a price action environment similar to the one seen from November 13 to 16. Before the London opening, EURUSD will likely retrace to highs and then fall back to 1.1830 (trendline at lows of 1.1746-1.1759). If the single currency holds until the North American session a breakout to 1.1920 should be expected.

At 14:00 GMT Moscow time, BoE Governor, Andrew Bailey, is scheduled to deliver a speech. At 16:00, ECB President Christine Lagarde will speak. This time she will be taking part in an online survey during the Bloomberg New Economy Forum. Lagarde speaks very often, so her remarks are unlikely to exert much of an impact on EURUSD performance.

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