Dollar Suffers on Continuous Rise of COVID-19 Cases 

  • 16
    November, 2020

    On Monday morning in Asia, the dollar was down due to the increasing number of COVID-19 cases and uncertain sentiments on COVID-19 vaccines.

    On Sunday, 15 countries signed the Regional Comprehensive Economic Partnership trade deal. The agreement pushed the investors to seek out riskier currencies early in the week.

    The US dollar index edged down 0.14% to 92.588 by 10:05 PM ET (2:05 AM GMT)

    The optimism of the U.S. dollar last week was subdued on Monday as the number of COVID-19 cases are continuing to rise globally, decreasing risk-appetite. As of Nov. 16, there were over 54 million cases worldwide and over 1.3 million deaths according to Johns Hopkins University Data. There are over 11 million cases in the U.S. alone.

    “Currency moves which were prompted by positive vaccine news have taken a pause. With no additional, positive news on the vaccine, U.S. interest rates and stocks went into correction mode at the end of the week, and USD/JPY fell,” Mizuho Securities chief currency strategist Masafumi Yamamoto said.

    Former U.S. President Donald Trump was active on Twitter over the weekend, refusing to acknowledge defeat against Joe Biden on Sunday morning and vowing to keep up a court fight that is seemed unlikely to succeed by experts. Meanwhile, Biden continues preparations to take office in January and find further measure on tackling the COVID-19 pandemic.

    “Over the weekend, uncertainty around the U.S. Presidential Election has declined as it became more certain that Joe Biden secured more votes and it’s easier for traders to take risks on hopes that the next administration would soon take measures against COVID-19,” Yamamoto said. The dollar could surge up against the Yen if U.S. bonds and stocks maintain their upward movement, he added.

     

    TECHNICAL OUTLOOK

    In the daily charts of GBP/USD, the sterling edged higher against the dollar early Monday morning in Sydney session.

    As what we can see in the charts, the price broke down from the support level at 1.31966 last Friday but quickly surged to resists at 1.31966 and closed with a strong bullish candle.

    On Monday Morning, the price surged up higher as the U.S. dollar is facing uncertainties due to rising of COVID-19 cases and uncertainties on the vaccines. The pair found support again at 1.31966.

    If the price will continue to support at this level, we can expect the pair to surge higher and test the resistance level at 1.34872. However, if the price will continue to surge down from this support level, we can expect the price to fall and retest the support level at 1.28685.

     

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