EUR/USD: the "lateralisation" process remains in place

The euro gradually regained its pivotal technical zone against the USD, with a strong pull effect, towards $1.1745/$1.1750, as the markets digested the decisive vaccination news at the beginning of the week. These are of course the joint announcements by Pfizer and Biotech on a level of effictiveness much higher than expected for its experimental Covid-19 vaccine. Specifically and precisely, this is the announcement of the interim results of the final phase of trials of the experimental vaccine of Pfizer and its partner BioNTech against the new virus, the most severe forms of which can be fatal. At this stage, these trials are showing 89% effictiveness.

The other major market driver for the USD is US policy. The next challenge is now the control of the Senate. The prospect of a Senate with a Republican majority, capable of constituting a counter-power favourable to the markets, notably on the fiscal front, is uncertain. It will be necessary to wait until eraly next year, with a second round in Georgia, to obtain a majority in the upper chamber.

Ceasar Perez, head of investments and CIO at Pictet, says: "The positive reaction of the equity markets to the US elections reflects in part the relief of seeing a traumatic election campaign come to an end and, above all, the likelihood of a divided Congress. It is likely that this will create a form of regulatory gridlock that will make it very difficult for the new administration to reverse the tax cuts introduced by President Trump and tighten the constraints imposed on business".

In statistical terms, the German ZEW index of confidence in the economy, came out this week in sharp contraction under 40, at 38.9, versus a consensus at 44.9 and a previous score of 55.9. On the other side of the Atlantic, the number of new job offers (JOLTS) was in line with expectations.

Right now, the pair is trading at $1,1813.

MEDIUM TERM FORECAST

In view of the current technical situation, our opinion remains neutral in the medium term on the EUR/USD.

We will maintain this neutral view as long as the price remains positioned between support at $1.1745 and resistance at $1.1900.