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FX.co ★ 02.12.2020: Euro and pound edge higher. Outlook for EUR/USD, GBP/USD

02.12.2020: Euro and pound edge higher. Outlook for EUR/USD, GBP/USD

In the early trading session, the US dollar tried to recoup yesterday's losses. However, its bullish run was limited by the common European currency, which was able to gain in value following the data on the labor market in the euro area.

The unemployment rate was expected to rise to 8.5% from 8.3%. However, since the previous figure was revised to 8.5%, the unemployment rate fell to 8.4%. Although the jobs data is negative, it turned out to be completely different to what was expected. Moreover, the news raised hopes that the labor market in Europe will finally rebound.

In addition to the labor statistics, the data on producer prices were also released. The decline in prices slowed down to -2.0% from -2.3% as expected. Therefore, there is hope that the euro area will edge out of a four-month period of deflation soon.

The UK approved the coronavirus vaccine for emergency use. Moreover, the government said the vaccine would be made available across the country from next week. However, instead of growing steadily, the pound sterling plummeted. The reason for such strange market behavior may be the fact that the UK is the only country in the world that has approved a vaccine against the coronavirus. Europe and the United States remain cautious and do not intend to take any hasty steps. In addition, some experts remain uncertain of the effectiveness of the vaccine approved by the United Kingdom. Thus, investors must have regarded such it as unduly hasty and costly actions.

In the previous trading session, the euro/dollar pair was extremely volatile. The price was able to advance by more than 150 pips and broke through the important resistance level of 1.2000.

The price slowed down between the levels ​​of 1.2060 and 1.2080 in the Asian session. Then its range widened slightly.

As the market is overbought, the pair is likely to move sideways by 50-60 pips or pull back towards the previously broken level of 1.2000.

Yesterday, the British currency followed its European counterpart and asserted strength as well. The pound/dollar pair managed to break through the upper border of the 1.3300-1.3400 sideways channel and consolidate above it.

However, in the early European session, the quotes turned around and moved towards the border of the sideways range.

Today, the pair is likely to continue trading in the sideways channel of 1.3300-1.3400.

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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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