KEY POINTS OF THE ARTICLE:

• Concerns and questions on both sides of the Atlantic
• The euro consolidates above 1.1745

CONCERNS AND QUESTIONS ON BOTH SIDES OF THE ATLANTIC

On Monday, the euro against the dollar reached its highest level in a week due to the weakness of the dollar. Gains from the single currency were contained by European economic concerns after the Bundesbank, in its monthly economic report, said the German economy could stagnate or even contract in the fourth quarter after a surge  in  Covid forced the government to impose new restrictions. EUR/USD was also under pressure after Germany's economy minister said on Monday that Germany must live with "considerable restrictions" for at least the next four to five months in an attempt to slow the surge in new Covid infections  .

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But the situation is not much better in the United States. The United States has reported at least 100,000 new Covid infections per day for twelve consecutive days through Sunday. On Monday, California reinstated a ban on many indoor businesses throughout the state, and its governor warned that he could impose a curfew. Michigan ordered a three-week partial shutdown, while the states of Oregon, Washington and New Jersey tightened restrictions. Even the governor of Iowa, long resistant to virus rules, has issued a mask requirement.

In addition, Monday's U.S. economic data was negative for the dollar after the Nov Empire U.S. Manufacturing Survey's corporate conditions index unexpectedly fell from -4.2 to 6.3. lower than expectations of +3.0 to 13.5.

In this context, Moderna's announcement of very positive tests on their vaccine had little impact on the currency market. Traders seem to be more focused on the impact of short-term news.

EURO CONSOLIDATES ABOVE 1.1745

The euro is trading in a wide horizontal channel between 1.1610 and 1.2000. An intermediate support was manifested on 1.1745 on which the European currency rebounded last Wednesday. The euro is supported by the 13-period moving average but faces resistance at 1.1870.In case of crossing, the pair could join the resistance at 1.1920, the last obstacle before the 1.2000.

Below 1.1745, a short-term negative bias would prevail with a possible return to 1.1610.

Evolution of the euro against the dollar in 4H data:

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