DOLLAR PRESSURE CONTINUES ON EURUSD
Prices in the EURUSD parity with the dollar assets, which are in the appreciation, entered a retreat movement up to the level of 1.17. Increasing uncertainty over financial incentive expectations causes the dollar side to stand strong, while increasing Covid-19 concerns and Brexit uncertainty in the Euro Zone cause the increases in the parity to remain limited.
In the USA, weekly unemployment benefit applications were announced with 898K people above expectations. Philadelphia Fed manufacturing index exceeded expectations at 32.3 in October, while New York Empire State manufacturing index pointed to a significant weakness with 12.3. Following these data, while a slight premium movement occurred in dollar assets, the risk appetite in the markets weakened after the announcement that it was difficult to catch up before the election. US Treasury Secretary Mnuchin announced that they are discussing the stimulus package with Trump and are continuing negotiations to present it before the election. US President Trump announced that he ordered Mnuchin to raise the stimulus package to more than $ 1.8 trillion and hoped the Republican party would agree to higher incentive spending. However, after McConnell, the leader of the Republican majority in the Senate, rejected the amount of stimulus package, the expectations for stimulus packages in the markets decreased.
If we look at the developments in the Euro Area, the European Union announced that it will continue the trade agreement negotiations with the UK in the coming weeks. While increasing the Covid-19 measures in Germany and France suppresses the euro assets during the day, the possibility of not realizing the Brexit agreement stands out as another factor that weakens the parity. ECB President Lagarde explained that the recovery is uneven by regions and that he expects the inflation side to turn positive again in early 2021. On the other hand, German Foreign Minister Maas called on the EU to approve the recovery package of 750 billion euros without delay and shared his unease regarding the Euro Zone economy.
Following all these developments, the declines in EURUSD parity below the 1.17 level can be expected to accelerate with the support levels of 1.1640 and 1.1575. For a possible recovery, we are following 1.1750 and 1.18 resistance levels.