The coronavirus pandemic has already caused serious damage to the EU economy, and it is too early to talk about recovery amid the second wave of COVID-19.
Investors are scared as assets stand still or move indefinitely, depending on the news flow.
Brexit is still a burning issue. The participants in the negotiation process cannot come to a consensus. Controversial issues are still on the agenda. Nevertheless, there are rumors that there could be progress in the negotiations and a miracle will happen next week.
It is hard to believe that such predictions may come true.
The EU leaders themselves are skeptical about the negotiations. Yesterday, they requested the European Commission to publish a plan in case the Brexit deal breaks down.
Forecasts
The deadline of the negotiations has been postponed many times. It is possible that on Monday, they will say that there is progress, but they need more time. Thus, the negotiations will be delayed again.
The British pound's reaction to either result of the Brexit trade deal has been already analyzed.
One of the recent surveys showed that traders are bored with the divorce process and in case of non-agreement, the euro may fall by about 4% of the current value.
A positive outcome of Brexit may lead to a rise of about 2.5%. Such modest forecasts are based on the fact that since the spring, the single currency has strengthened by more than 12%, and with the second wave of the coronavirus infection, investors are showing almost no interest.
In terms of technical analysis, we can see that on November 18, the quote failed to overcome the peak of the previous day located at 1.1893. As a result, there was a stop with a reverse. Traders are inclined to believe that the area of interaction of trading forces 1.1900/1.1920, near which the price was hovering, is putting pressure on long positions. As a result, there was a natural rebound, which in theory could be a repeat of the dynamic recorded on November 9.
On November 18, there was a slowdown in volatility for the fifth day in a row. The average indicator for this period was 49 points, which is 37% lower than the overall dynamic. However, speculative activity was quite high. A decline in activity for such a long period is likely to lead to an acceleration, which is so much expected by traders.
On the daily chart, we can see a sideways movement, where the area of interaction of trading forces 1.1900/1.1920 is considered as a possible upper limit. At the same time, many traders predict a natural rebound in the direction of the lower border of 1.1650.
Today, the US published its labor market data. Thus, the US reported on its unemployment claims. The number of the continuous claims went on dropping pointing to the labor market recovery.
Thus, continuous claims dropped by 429 thousand to 6,372 thousand from 6,801 thousand. The number of the first-time claims increased by 31 thousand. However, economists had expected a slide of 24 thousand.
The market has almost ignored the data.
Analyzing the current trading chart, we can see that during the European session, the pair approached the level of 1.1810 returning to the dynamic recorded on November 16.
If the price consolidates above 1.1810, it may rebound and the number of long positions will grow.
To start the downtrend, the pair should fix below 1.1800/1.1810. After that, sellers could become more active thus pushing the price towards 1.1750.
Indicator analysis
Let's analyze the price movement on various time frames. Thus, on the one-minute and one-hour charts, we can see sell signals that appeared after a rebound from the area of interaction of trading forces. On the daily chart, the uptrend prevails. A change in the signal may occur, only if the price fixes at the level of 1.1750.
Volatility for the week/Measurement of volatility: month; quarter; year
The measurement of volatility reflects the average daily fluctuation, calculated for the month/quarter/year.
At the moment, dynamic is only 41 points, which is 47% below the average level. The acceleration may occur at the time of the breakdown of the mirror levels, which could lead to higher speculative activity.
Key levels
Resistance levels: 1.1900-1.1920**; 1.2000***; 1.2100*; 1.2450**; 1.2550; 1.2825.
Support levels: 1.1810*; 1.1700; 1.1612*;1.1500; 1.1350; 1.1250*;1.1180**; 1.1080; 1.1000***.
* Periodic level
* * Range level
***Psychological level