The safe-haven dollar is rising as concerns about the fast-spreading COVID-19 strain weigh on sentiment. Congress passed the stimulus bill as expected. Hopes for a Brexit breakthrough keep the pound afloat. US growth figures and vaccine developments are eyed.
US stimulus: Congress completed the passage of the $900 stimulus bill and payments to the unemployed, small businesses, and others are set to roll out in the next few days. The legislation was part of a “catch-all” bill which also averts a government shutdown and passes additional decisions.
Markets had already priced in the deal which now awaits President Donald Trump’s signature. Gold, which initially jumped in response to the breakthrough, is steady on the lower ground around $1,875.
Brexit: The UK has reportedly made a considerable concession on fisheries, dropping its demand for an EU reduction of catches at UK waters from 60% to 35%, still apart from the bloc’s demand of 25%. The differences are minuscule in economic terms but politically sensitive. European fishery lobbyists feared that Chief EU Negotiator Michel Barnier is ceding too much ground.
The final read of US Gross Domestic Product figures for the third quarter is set to confirm the surge of 33.1% annualized in output. Existing Home Sales figures for November are forecast to show ongoing strength in the sector. AUD/USD remains on the back foot despite upbeat preliminary retail sales figures for November.
EUR/USD did not manage to get above the resistance at 1.2250 and is trying to move below the nearest support at 1.2220.
EUR/USD is currently testing the nearest support level at 1.2220. If this test is successful, EUR/USD will gain additional downside momentum and head towards the next support at 1.2175. There are no important levels between 1.2175 and 1.2220 so this move may be fast.
If EUR/USD settles below the support at 1.2175, it will move towards the support at 1.2155. A move below this level will open the way to the test of the next support level at the 20 EMA at 1.2135.
The 20 EMA will likely serve as a major support level for EUR/USD, and I’d expect a lot of interest from traders in case EUR/USD gets to another test of this level.
On the upside, the nearest significant resistance level for EUR/USD is located at 1.2250. This resistance level was tested during yesterday’s trading session and proved its strength. If EUR/USD settles above this level, it will head towards the next resistance which is located near the recent highs at 1.2280.
GBP/USD is testing the nearest support level at 1.3400.
GBP/USD is testing the support at 1.3400. The 20 EMA is in the nearby so GBP/USD may get material support at this level.
If GBP/USD manages to settle below the 20 EMA, it will gain downside momentum and head towards the next support level at 1.3320. There are no important levels between 1.3320 and 1.3400 so this move may be fast.
In case GBP/USD settles below the support at 1.3320, it will get to the test of the next support level at 1.3300. A move below this level will open the way to the support at the 50 EMA at 1.3285.
On the upside, GBP/USD needs to stay above 1.3400 to have a chance to develop upside momentum in the near term. The next resistance level for GBP/USD is located at 1.3440. A move above this level will push GBP/USD towards the resistance at 1.3485.
Most likely, GBP/USD will remain highly volatile in the upcoming trading sessions so traders should be prepared for fast moves.
The direction of the February Comex gold market on Tuesday is likely to be determined by trader reaction to $1870.30 and $1894.60.
A sustained move over $1894.60 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible acceleration to the upside on a move through $1912.00.
A sustained move under $1870.30 could lead to a labored break due to the series of retracement levels at $1855.10, $1839.60 and $1822.50.
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