GBP/EUR: Pound Rallies Ahead Of BoE Announcement

The market mood deteriorated in the Asian session on fading US fiscal stimulus  hopes and on reports  of foreign interference in the US presidential election.

Soaring coronavirus cases is threatening to derail the fragile economic recovery in Germany.

DAX 30 index set to  extend losses as it forms a bearish topping pattern.

Stock markets fell in Asian trade after the US government reported an attempted interference in the US presidential election by Russia and Iran.

Australia’s ASX 200 declined-0.29% and Japan’s Nikkei 225 dropped-0.62%.

The safe haven US Dollar and Japanese Yen surged versus their major peers. The risk-sensitive Australian Dollar traded lower below  0.71 .

US jobless claims data  and existing home sales for  September will be in focus..

Soaring Covid-19 Infections Weighing on DAX 30 Index

Covid cases hid a record high in  Germany dragging on theDAX30 which fell  over 5% over the past week tracking the nation’s rising Covid-19 cases. Covid cases  climbed by a record 11,200 on October 21 boosting fears of further economically-devastating restrictions to stem the spread of the virus..

those municipalities deemed by the government as having a “high concentration” of Covid-19 cases will see tighter restrictions. The government is advising to stay at home, whenever possible”.

high-frequency data reveals the impact that tighter restrictions are having as all three mobility trends – walking, driving and transit – continue to decline after peaking mid-September.

German Health Minister Jens Spahn has ruled out a  nationwide lockdown, which could be beginning to concern regional investors.

The risk-gauging yield spread between Italian government bonds and German Bunds has increased after hitting a post-crisis low on October 13, Meanwhile, DAX 30 volatility index (VDAX) spiked to its highest level since mid-September.

Health developments could continue to dictate near-term price action. Rising cases and more restrictive measures potentially dragging on the DAX.

Europe’s ‘safe haven’ , the German 10-year Bund, looks to be preparing to extend its 10-day rally from the monthly low set on October 7 (104.93), as price remains above key support at the 61.8% Fibonacci (105.84).

The RSI hints that additional gains could be coming; oscillator holds above 60 even though it reversed firmly lower from its first entry into overbought territory in over 6 months..

The Dax trades firmly above the 21-, 50-, 100- and 200-day moving averages and within an Ascending Schiff Pitchfork, signalling that the path of least resistance seems skewed higher.

A rise to retest the monthly high (106.20) looks likely in the coming days if the 61.8% Fibonacci (105.84) continues support. A daily close above 106.50 could open the door to resistance at the 100% Fibonacci expansion (107.06) and coinciding with a period of persistent risk aversion, could trigger a marked selloff of the Germany DAX 30 index.