Home Forex News EUR/USD Is Rejected on 5-day SMA, despite Its Stock Market Gains

EUR/USD Is Rejected on 5-day SMA, despite Its Stock Market Gains

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  • Asian stocks rise, but risk-on fails to put a bid under the pair.
  • COVID-19 concerns and dovish ECB expectations weigh on the euro.
  • EUR/USD sidelined after rejection at the bearish 5-day simple moving average.

The EUR/USD pair is struggling to draw bids, despite improved risk appetite in the financial markets.

The pair is currently trading near 1.1707, having to face rejection at the descending 5-day simple moving average (SMA) resistance at 1.1725 during Asian trading hours.

Risk recovery

Major Asian indices like Japan’s Nikkei and Australia’s S&P/ASX 200 flashed green alongside a 0.5% gain in the S&P 500 futures. Stocks are seemingly drawing bids on expectations for additional US fiscal stimulus before the Presidential Elections on November 3.

Furthermore, the news that drugmaker Pfizer Inc. would have a coronavirus vaccine ready in the United States by the end of the year looks to be powering gains in stocks.

Usually, the stock market gains weight over the greenback. At this time, the risk-on isn’t helping EUR/USD.

This is possibly due to rising economic uncertainty across the Eurozone, courtesy of the second wave of the coronavirus. Italy’s cases swelled on a daily record on Sunday, while the government prepares for new containment measures. Meanwhile, the US had a fifth consecutive day of infections over 50,000.

Aside from this, markets are pricing more ECB stimuli, as indicated by the US-German yield differential’s recent widening.

The pair may take cues from German Bundesbank’s monthly economic report and ECB President Lagarde’s speech, due during European trading hours. On the North American trading hours, the focus will be on the Federal Reserve Chairman Powell’s speech. 

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