Dollar Down Once Again on COVID-19 Vaccine Hopes 

  • 23
    November, 2020

    On Monday morning in Asia session, the dollar was down amidst hopes of early distribution of COVID-19 vaccines to control the spread of the virus. 

    The US Dollar Index was down 0.34% to 103.145 by 12:12 AM ET (4:12 AM GMT) 

    The FDA is looking forward to grant approval on Mid December for the release of the vaccine candidate produced by Pfizer Inc and German partner BioNTech. 

    The U.K. could also grant regulatory approval to BNT162b2 this week. 

    However, millions of Americans are warned to stay at home until the upcoming thanksgiving holidays to curb the spread of disease and prevent the increasing number of infections brought by the second wave of COVID-19. 

    On Wednesday, the Fed’s policy meeting will be released and will be scrutinized for confirmation that Fed policymakers discussed adding to the central bank’s asset-buying plans. 

    “The minutes should help gauge whether our call for a lengthening of the maturity mix as soon as the December meeting remains on track,” TD Securities analysts said in a note. 

    Despite the losses that the US dollar incurred for the past few days/weeks, some investors are still on the long-term bullish side of the dollar. 

    “We think that the exchange rate will rise further over the next few years against a backdrop of lower euro-zone stability risks; an increased real yield gap between the euro-zone and the U.S.; and a continued recovery in the global economy,” Capital Economics analysts said in a note. 

     

    Technical Outlook 

     

     

    In the daily charts of GBP/USD, the pair edged up early Monday morning in Asia session. 

    As what we can see in the chart, the sterling is surging up against the US Dollar and is being supported at the support level at 1.31776. 

    With the dollar’s performance affected by the vaccine sentiments from investors, the dollar is falling against a basket of major currencies. 

    Sterling on the other hand is being supported by Brexit hopes between EU and UK. A decision that will come in a few weeks greatly affects the sterling’s performance. A Brexit-deal will most likely support the sterling and we may see the pair test the resistance level at 1.34 or break out from this level. 

    However, a no-deal may hurt the sterling and we may see the price breakdown from the support level at 1.31776 and re-test the support level at 1.26885  

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