- Summary:
- EURUSD slumps nearly 100 pips as new coronavirus strain in the UK and downbeat DIW report pressurize the Euro and cause safe-haven US Dollar demand.
According to a developing story monitored over the newswires, the European Medicines Agency (EMA) could approve the Pfizer/BioNTech coronavirus vaccine for emergency use on Monday, following the detection of a new, highly contagious strain of the coronavirus in the UK.
Several EU countries have banned all flights from the UK in a move to ensure it does not spread into the EU, but this pending approval could provide another layer of protection for the EU public. However, it is unknown to what extent the coronavirus vaccines could protect against a new strain.
The latest report from DIW, Germany’s economic institute, says that the EU economy could contract 1% in Q4 2020, and will also contract even more in Q1 2021 if the second hard lockdown in Germany persists. The report indicates that the economy could get back on the path of recovery in February if the situation normalizes.
Technical Outlook for EURUSD
The global market selloff and flight to safety favour the US Dollar this Monday. The EUR/USD is down nearly 75 pips at the time of writing, having been down nearly 100 pips at a point. The pair is now challenging the 1.21685 support, with 1.20890 and 1.19999 standing by as new targets to the south if the current support collapses.
On the other hand, a recovery bounce puts 1.22661 at risk, and a break above this level targets the March/April 2018 highs at 1.24081 in the near-term.
EUR/USD Daily Chart
