After a bearish start, the EUR/USD pair returned to rebound higher and succeeded in testing the 1.1910 resistance before settling around 1.1890 at the time of writing. This comes ahead of a day full of important economic data, as well as ahead of the American Thanksgiving holiday tomorrow, which will affect the liquidity in the markets and the movement in the Forex market. The euro resumed benefiting from investor risk appetite after the announcement of more coronavirus vaccines. However, Europe is facing difficulties in passing economic stimulus plans to revive its economy.
Germany revised its third-quarter GDP growth rate to show a quarterly increase of 8.5% instead of 8.2%, driven by stronger consumption. While the review is positive, it's a bit outdated, and many fear a recession or worse in the quarter. Separately, the IFO reading weakened German business sentiment for November, but the overall assessment of the investment climate did not weaken as much as was feared. This was lowered to 90.7 from the revised 92.5 (initially 92.7). While the outlook component dropped more than expected (to 93 from 95), the current valuation remains better and has not changed much (90.0 vs. 90.3).
President Trump, while not conceding, authorized his administration to begin the transition process. Accordingly, Biden is expected to officially announce several nominations for positions in his administration. The president-elect appears to surround himself with many familiar faces from the Obama administration.
The US Consumer Confidence Index fell to a reading of 96.1 in November, as an increase in coronavirus cases lowered US optimism to its lowest level since August. The November reading of the Conference Board said it was down from the revised 101.4 in October. This reflected a significant decline in consumers' expectations of income, business and the labour market. Lynn Franco, Senior Director of the Conference Board Economic Indicators, said: “As 2021 approaches, consumers are not expecting the economy or the labor market to gain strength. In addition, the resurgence of COVID-19 increases uncertainty and exacerbates concerns about the outlook.”
US consumer confidence is being watched closely for clues about household willingness to spend, as consumer spending represents 70% of economic activity in the United States of America. Commenting on this, Chris Robke, Chief Financial Economist at MUFG, said: “We believe that the sharp rise in positive coronavirus cases nationwide, which has led to new restrictions and closures in many states, has increased consumers' fear of what awaits them and their families, as we approach the holiday season and the end of the year ”.
The Consumer Confidence Index was set on a scale to equal the confidence level in 1985.
Technical analysis of the pair:
The general trend of the EUR/USD pair is still bullish. At the same time, there are fears of a strong breach to move towards the psychological resistance level at 1.2000, which is possible because the European Central Bank does not want the value of the euro to rise more than that. There were tough comments from the ECB when the currency pair tested that resistance last September. Any indication from the bank regarding the risks of the euro’s strength will increase selling at any time. Therefore, we prefer selling if the pair moves more than the current situation, and the closest resistance levels are 1.1927, 1.2000 and 1.2075, respectively. On the downside, a breach of the 1.1745 support will have a strong direct impact on the pair’s current performance.
Today's economic agenda:
The calendar today includes the announcement of the US GDP growth rate, unemployment claims, durable goods orders, consumer confidence, new US home sales, and content of the Federal Reserve Bank last MoM, ahead of tomorrow’s Thanksgiving holiday.
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