- EUR/USD is steady for no apparent reason.
- A dovish ECB, surging covid cases in the rising eurozone and US election uncertainty could drag on the pair.
- Thursday’s four-hour chart looks bearish.
Analysts widely believe that the ECB will leave policy unchanged. However events are moving quickly. Both Germany and France announced month-long nationwide lockdowns to stem the surge in coronavirus cases. The announcements from Berlin and Paris dragged on the common currency and could encourage the ECB to act as well.
An interest rate cut from the ECB is unlikely given that rates are already at -0.50%. The central bank could expand the Pandemic Emergency Purchase Program (PEPP) and accelerate the pace of bond-buying.
The ECB could signal towards more action in December when the ECB publishes new projections. Still the deteriorating outlook is expected to be reflected inThursday’s decision and could drag on the euro.
The US elections also add a heavy dose of uncertainty. National polls continue to show Democrat Joe Biden leading over President Trump, but the races are close in key swing states such as Florida– and North Carolina, where a critical Senate race is tight.