Last week, the euro slumped to a month low against the US dollar. Today, the single currency has almost got stuck showing an insignificant drop. At the same time, the British pound opened the trading week with a confident slide. In our video review on InstaForex TV channel we will find out the main reasons for such a decline and try to predict further movements of the currencies.
Thus, the pound sterling drop could be triggered by the second lockdown introduced at the weekends. Prime Minister Boris Johnson said that the UK would impose a one-month quarantine from Thursday. Such a decision was made after the number of virus cases in the UK exceeded 1 million. Moreover, senior cabinet minister Michael Gove emphasized that the quarantine period could be extended if necessary.
That is why the market participants are pricing in this information. Judging by the euro’s dynamic, the decline in the pound sterling may stop soon. As a result, the market may get stuck.
Investors prefer cautious trading ahead of the US Presidential election. According to opinion polls, Joseph Biden is likely to win the race. Such a result may cause a lot of concerns. The fact is that during the political campaign, economic issues were not tackled due to the coronavirus pandemic. That is why Joseph Biden’s approach to economic problems is still unknown. Thus, it is possible that at the end of the day, the market will get stuck until the publication of the first election results.
On Friday, the euro/dollar pair fixed below 1.1650 on the four-hour chart.
At the moment, the price is approaching the local low of 1.1612 logged on September 25. The market is still under bears’ control. Once the quote fixes below 1.1600 on the four-hour chart, it may drop to 1.1550;1.1350; 1.1180.
At the same time, the pound/dollar pair managed to resume its downward movement after a short-lived rebound. The pair is approaching the area of 1.2860-1.2885. If the pair breaks the area, sellers may start opening deals.
On the trading chart, we can see that the price is hovering between the mentioned levels. The pair is trying to rebound, but the seller’s pressure is too high. That is why the pair may slow down within the limits of the range. If the pound/dollar pair fixes below 1.2840 on the four-hour chart, bearish interest is likely to become greater thus leading to a bigger number of short deals.
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