Comment: US recap: EUR/USD barely holds positive as dollar rebounds
04/01/2021 20:01
Jan 4 (Reuters) - The dollar rose in U.S. trade on Monday, rebounding from
overnight losses as investor sentiment turned cautious over surging COVID-19
infections that could prompt further economy-dampening restrictions despite the
rollout of vaccines.
Tuesday's runoff elections in the U.S. state of Georgia, which will decide
which party holds the majority in the U.S. Senate and potentially affect the tax
and stimulus outlook, also gave investors pause for thought.
Britain's four chief medical officers and the medical director of England's
health service said the alert level should move to its highest urn:newsml:reuters.com:*:nL1N2JF09J.
The prospect of another round of lockdowns diminishing the 2021 growth
outlook helped push UK and EU front-end rates lower, giving the long-suffering
dollar some relief.
Risk markets went broadly into retreat though CNH held onto 0.71% gains,
helped by solid results from China and Asian manufacturing PMIs.
EUR/USD moved lower in U.S. trade, but it managed to hold onto a 0.23% gain
at 1.2245, after falling from its early New York high at 1.2310.
GBP/USD bore the brunt of the selling, with the pound falling from its
European peak of 1.2703, its highest level since 2018. Cable was ending Monday
down 0.78% at 1.3565.
Traders are likely to keep an eye on the 10-day moving average at 1.3527. A
move below there could open the way to a drop to daily cloud top support by
1.3211.
USD/JPY was caught between upbeat Asia global growth tones, haven unwinds
and the dollar's resurgence after putting in a new, post-COVID, trend low at
102.72.
The yen weakened in early NorAm as the overall global growth view diminished
but lagged other major currencies' weakness as haven buying set in during the
New York afternoon.
AUD/USD moved back within its Bolli envelope after putting in a new trend
high in Europe at 0.7740. The gain was short-lived after USD buyers entered the
market. The pair was ending the U.S. afternoon down 0.3% at 0.7670. A move below
the 10-DMA by 0.7611 would further weaken the aussie’s current bullish
structure.
Gold and Crypto remained firm as traders may be starting to doubt global
central banks' ability to manage another round of COVID-related economic
stagnation before vaccines reach peak distribution.
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(Editing by Burton Frierson
Paul Spirgel and Christopher Romano are Reuters market analysts. The views
expressed are his own.)
((paul.spirgel@thomsonreuters.com))