Market Watch. USD remains at risk

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Market Watch review. 30.11.2020

In today's release, we’ll cover the following topics:

  • Trade conflict between Australia and China. 
  • Strengthening of the EUR / USD currency pair. 
  • Fed monetary policy. 

I will start today's review with a statement from the Australian Minister for Trade that they are considering an appeal by the World Trade Organization against China's decision to impose tariffs on barley imports. Given that China is a key trading partner for Australia, further deterioration in trade relations is a bearish fundamental for the Aussie. 

Nevertheless, during the Asian trading session, the AUD/USD currency pair renewed highs above the psychological and at the same time technical resistance level of 0.7400. As a result, there is still a risk of further strengthening of the pair quotes against the background of the general weakening of the USD and optimism caused by the success in the development of the vaccine. But active purchases below the technical resistance level of 0.7400 remain in the zone of increased trading risk.

Shifting to the European trading session, I note a low saturation of the news background, so the volatility of trading, before the opening of markets in the United States, remains moderate. The observed strengthening of the EUR/USD pair is largely due to the weakening of the US dollar. However, active purchases under the technically strong 1.2000 resistance level remain impractical.

Before the opening of the US trading session, we observed a moderate growth of the EUR/USD currency pair. The first wave of growth occurred during the Asian session and was completely provoked by the general weakening of the USD, while the second attempt of buyers to reach the psychological resistance level of 1.2000 was observed closer to the middle of the European session. At the same time, Deutsche Bank notes the stability of the European economy, which in the end can provide a more powerful growth of the pair.
Now let's move on to the USA. Traders and investors are no longer counting on significant financial assistance from the US government, so they shifted their attention to the Fed in anticipation of further monetary easing. This is probably why we are seeing a general weakening of the US dollar across the entire spectrum of the market. But the main wave of growth in trade activity may fall on the American session. 

Let me remind you that at the end of last week in the United States was a weekend in connection with the celebration of Thanksgiving. Therefore, today there is a risk of a significant increase in trade activity, including the case of an increase in the number of infected people in the United States, because this is a family holiday. In this case, the demand for USD may increase sharply, fully compensating for all losses in the first half of the day. 

Closely monitor the news background and be prepared for all the surprises of the market.

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