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EURUSD: two daily pinbars flag further euro weakness

The EURUSD pair logged losses on Wednesday, November 18, dipping 0.08% to 1.1852. The euro slid 41 pips to 1.1849 after an unsuccessful attempt to retrace back to Tuesday's high of 1.1894. The single currency started to decline after trading opened in London.

Gains in equities stoked risk sentiment in the FX market, but the euro dropped to 1.1852 after the gold price and GBPEUR cross pair sank.

Gold retreated on the back of news from Pfizer, which announced that its Covid-19 vaccine has 95% efficacy, up from 90% as reported earlier this week. The euro also depreciated against the dollar since gold has a positive correlation with the euro. The British pound, in turn, retraced to its intraday high on expectations of a Brexit breakthrough.

Today’s macro agenda (GMT+3)

  • 11:00 Eurozone: ECB balance of trade (September)
  • 16:30 US: Philadelphia Fed manufacturing index (November) and weekly initial jobless claims
  • 18:00 US: CB leading economic index (October), existing home sales (October).
1

Current outlook

Buyers failed to break out of the 1.19 mark during the last advance to 1.17891. A pinbar formed on the hourly TF, followed by a decline in the price action to 1.1852. Resistance shaped up at 1.18900, and after the pair dropped below 1.1851, a double top pattern emerged, which resembles two pinbars on the daily TF. The first one closed with a bullish candle body, whereas the second one looked bearish. Both patterns point to the extension of downward movement to 1.1812 or below.

This morning, major currencies have been trading in the red against the greenback. Cable is the big loser, down 0.25% (-0.29% earlier). The British pound is selling off amid rumors that the European Commission (EC) supports plans for a no-deal Brexit. Europe's leaders are expected to demand today that the EC publish no-deal plans amid fears that Brexit negotiations keep dragging on, leaving companies in the dark about what to prepare for in a worst-case scenario.

FX market activity can be expected to pick up during the North American session. EURUSD looks set to trade below the balance line in the range of 1.1832-1.1860 until 13:00 GMT.

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