Global markets came to the middle of the week in an excellent mood.
Some stock indices are already at highs, while others are just preparing to make a decisive breakthrough.
The reasons for the current enthusiasm are quite understandable.
Data on the high effectiveness of experimental COVID-19 vaccines allowed investors to believe in an early victory over the pandemic.
Joe Biden won enough electoral votes to win the presidency and started talking about appointments to the new administration.
Equally important, the current head of the White House, Donald Trump, agreed to begin the transfer of power.
However, to continue the rally, markets will need to see the results of the Christmas sales season, which starts on Black Friday on November 27 and will show whether households in developed countries are switching to a savings behavior model characterized by a reduction in demand for goods and services. Weak results can be a signal to take profits, especially given that the markets are overheated and the correction is almost overdue.
Progress in developing a coronavirus vaccine and easing political uncertainty in the US has increased demand for risky assets, while the protective greenback has come under pressure.
On Tuesday, the Dow Jones index exceeded 30,000 points for the first time in history. The S&P 500 index also hit a new record high, closing up 1.6% to 3,635. 41.
Meanwhile, the greenback continued to suffer losses, sinking by 0.6%, and the EUR/USD pair rose from 1.1839 to 1.1897.
The euro was supported by statistics for Europe. According to the final estimate, German GDP contracted by 3.9% year-on-year in the third quarter, with an expected decline of 4.1%. According to the IFO research institute, the business climate index in Germany fell in November weaker than expected, to 90.7 points.
At the same time, consumer confidence in the US, according to the Conference Board report, fell for the second month in a row in November, to 96.1 points from 101.4 points recorded in October. Analysts predicted a decline to 98 points.
Current data reflect the recent increase in the incidence of COVID-19 and restrictive measures introduced in several states to contain the spread of the virus.
On Wednesday, the US currency is trading near two-month lows, and the EUR/USD pair approached an important resistance around 1.1920, where the monthly peak and the highest level since the beginning of September are located.
Against the backdrop of an empty economic calendar for the Eurozone, the main currency pair will continue to trade under the influence of market sentiment, dollar dynamics, and statistics for the United States.
On Wednesday, investors are waiting for the publication of the final estimate for US GDP for the third quarter, the release of data on income and spending in October, as well as information on the number of Americans who first applied for unemployment benefits last week.
Traders are also waiting for the release of the minutes from the Fed's November meeting, which may shed light on the Central Bank's mood regarding the expansion of bond purchases. Any hints of the regulator's readiness for new measures in December may put pressure on the dollar.
Euro fans were encouraged by the news that France is beginning to gradually ease quarantine restrictions, while they were alarmed by the reverse trend in Germany. If the country's authorities agree to introduce new restrictive measures, this could hit the euro.
"The pair is holding below the November high at 1.1920 and will continue to be in demand as long as it is trading above the six-month support line at 1.1695. The level of 1.1926 represents the last line of defense before the August high of 1.2014," Commerzbank strategists said.
On Thursday, US markets will be closed, but currencies will continue to trade on other platforms around the world. So relaxing in the next couple of days is not worth it. It is quite possible to expect serious movements in the currency market, which are likely to be triggered by news from the coronavirus front.
