After another manic Monday and the second release of a Covid-19 vaccine, stock markets are trading in the red as investors once more focus on the latest surge in infections and the potential US lockdowns which may come after Thanksgiving next week.

The release of disappointing US retail sales is also not helping the downbeat mood with all October’s readings frustrating the bulls. The headline print missed by two-tenths coming in at 0.3%, while we saw downward revisions in all previous data.  Spiralling new Covid rates and falling household income as millions of unemployed Americans lose government financial support hit retail spending hard in October. That said, one bad month doesn’t make a trend and this soft report comes on the back of several months of surprising gains.

Somewhat unusually in this more sober environment, the USD is continuing to trade lower versus its peers, leaving the DXY edging towards the lower end of the trading range in place since August. Oil has also been caught up in the sombre sentiment with crude down over 1%. There is some chatter in the market that the OPEC+ meeting at the end of this month will agree on a three-month cut extension.

EUR pushing into resistance

With the broad Dollar decline persisting, the Euro is moving higher for a fourth straight day. German Chancellor Merkel offered a gloomy assessment of the current second wave hitting the country, but case counts across the bloc are moving in a more positive direction. Can EUR/USD break out to the upside if the US and Europe follow different virus / lockdown paths as we head into the final month of the year?

The 1.19 zone represents a strong barrier to further gains and heavy selling should be expected around that level. The 1.1620-1.1950 range has crossed many months and the longer we trade sideways, history books tell us the stronger the breakout will be.

Sterling boost on Brexit headline

GBP is the strongest major today on news that the EU and UK may agree to a trade deal by early next week. Time pressures are now all-engulfing for negotiators and reports suggest a ‘light’ agreement on goods only may be near, though this is Brexit remember and nothing is done until the ink is dry!

Cable needs to take out last week’s high above 1.33 before it embarks on the September spike high at 1.3482. Bullish momentum is fairly steady so the series of higher highs and higher lows from mid-September remains intact.

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