The Euro-dollar pair is aggressively working on the 19th figure. The buyers yesterday were able to overcome the solid level of 1.1900 but could not gain a foothold above this target. Today, the bulls made another attempt to storm but they were forced again to retreat from the conquered heights. In my opinion, the priority still remains for long positions: dollar bulls make counter attacks but the southern momentum fades as soon as the pair breaks the 1.1850 mark. All this indicates the continued potential of the Northern movement of EUR / USD and the inability of the pair's bears to reverse the trend.
Let me remind you that traders have not been able to get out of the area of the 18th figure for the second week. As soon as the price approaches the 19th price level, it attracts sellers. And just after the bears approach the levels of 1.1820 to 1.1840, buyers come to the forefront. This "price ping-pong" leads to the fact that the pair actually stands still, despite the high intraday volatility. The problem is that currencies react impulsively to the current news flow but they cannot win the confidence of traders for a larger attack. Therefore, the upward and downward price spikes quickly fade. This is why the pair has been trading within a wide price range of 1.1830 to 1.1910 since November 16.
The fundamentals for the EUR / USD pairs are controversial for both the euro and the dollar. The American currency has been under pressure from the "coronavirus factor" for several weeks. While the European lockdowns, which were introduced in early November have already begun to show results: the incidence in key EU countries has begun to gradually decline. Whereas in the United States, the indicator of the daily increase in the number of cases continues to gradually move up: if in early November this indicator did not fall below the 100 thousandth mark, then in recent days it does not fall below 170 thousand. Such alarming trends are partially offset by news from the pharmacological front: at least three American vaccines are in the home stretch. According to preliminary data,
The news from the US Political Olympus has a certain impact on the dollar also. In this context, we can distinguish two news items of today. First, after a long period of uncertainty, Donald Trump has finally agreed to begin the formal process of transferring Presidential power to Joe Biden. And although he still voices aggressive statements about litigation, the head of the White house gave up under the onslaught of numerous facts not in his favor.
In particular, the courts either did not accept many of the Republican's lawsuits or did not satisfy them based on the results of their consideration. In some States, Trump's lawyers achieved a recount - but in the end, the Republican could not pull out a victory in any of the lost precincts. The fact that the incumbent President agreed to begin the transit of power provided little support for greenback.
The second good news for the dollar is that the next Treasury Secretary is likely to be Janet Yellen, who led the Fed before Jerome Powell. She is a well-known trader and currency strategist, so the news of her nomination was received with optimism by the market. In particular, according to some analysts, it will lobby for the adoption of a large-scale package of additional assistance to the American economy. By the way, Yellen will be the first person to head the Federal Reserve and the White House Council of economic advisers before becoming head of the Treasury Department.
Given this fundamental background, the question arises: why are the EUR / USD bears not even able to approach the base of the 18th figure? In my opinion, the point is that each of these fundamental factors has its own "wormhole".
For example, if we talk about the coronavirus vaccination process, we can say that this is a "long game", while COVID is gaining momentum in the States here and now forcing state governors to tighten quarantine restrictions (which negatively affects the dynamics of key macroeconomic indicators). Biden's victory has long been played back by traders and the fact that Trump finally gave up did not make any furor in the market as the dollar received only short-term support. Yellen's appointment has also long been discussed in the American press. She does intend to open the budget tap as much as possible. But to do this, Democrats need to pass the Senate, where Republicans control the majority. As you know, the majority of senators do not support the idea of large-scale incentives.
Thus, the dollar is not able to take full advantage of the "hawkish" fundamental factors even though at first glance everything is conducive to this.
The European currency is waiting for the resolution of the budget crisis. As you know, Hungary and Poland blocked the adoption of the EU budget, as Brussels can organize these countries "financial famine" due to non-compliance with the rule of law in domestic politics. But today it became known that political negotiations with Budapest and Warsaw have already reached the final stage. According to the German foreign Minister, the new budget "will appear in a couple of days and will help to quickly allocate billions of euros to help countries affected by the pandemic." Many experts had no doubt that the parties would eventually come to a political decision, but the approval process was still somewhat delayed, so this fundamental factor is still in the spotlight. If the budget process is indeed unblocked in the coming days (apparently, this will happen before Friday), the Euro will get an additional reason for its growth.
From the technical point of view, long positions on the EUR/USD pair are also a priority. The price on the daily chart is located between the middle and upper lines of the Bollinger Bands indicator, as well as above all the lines of the Ichimoku indicator (including the Kumo cloud.) All this suggests that the pair can be considered longs with the first goal of 1.1950 - this is the upper line of the Bollinger Bands on the same timeframe.