15.10.2020: Main reasons for slump in GBP and EUR. Outlook for EUR/USD and GBP/USD

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The coronavirus pandemic is again the main factor that shapes investors’ sentiment. The fact is that the rising number of Covid-19 cases led to a slump in European currencies.
Markets went into panic after the news that yesterday, Germany logged the record number of new virus cases. Until recently, the epidemiological situation in Germany was better than in other European countries. However, it failed to avoid the second wave of the coronavirus. As a result, the German authorities may reintroduce restrictive measures that were imposed this spring.
At the same time, the epidemiological situation in other countries is also getting worse. For example, France imposed curfew on Paris and other big cities. The same measures could be taken in London. In other words, the risk of a new lockdown is rapidly growing. That is why investors are selling off European assets in an attempt to avoid tremendous losses.
It looks like investors are not interested any more in the results of the EU summit devoted to the issue of trade negotiations between Brussels and London. Moreover, analysts do not expect any new decisions. It was suggested that the next EU summit, on November 15, could be the next target date for an agreement.
In fact, the coronavirus issue has overshadowed even the US labor market data. According to the forecasts, the figures could boost the US dollar. The number of first-time claims is expected to rise whereas the continuous claims may decline. In general, unemployment is dropping, which points to a possible rapid recovery of the labor market and, as a result, of the whole economy.
After a short-lived fluctuation, the euro/dollar pair managed to approach the support level of 1.1700. It is quite possible that this level may influence short deals. Thus, traders are recommended to focus on the price fixation below the level of 1.1690 on the four-hour chart. In this case, the pair may drop deeper to 1.1650. Otherwise, it will jump to 1.1730.
Yesterday, the pound/dollar pair showed extremely high activity. As a result, the pair start moving towards the psychological level of 1.3000. Such a dynamic was caused by a flow of news.
On the trading chart, we can see that the price is falling. It has already fixed below the level of 1.2960.
Under the current conditions, news about such burning issues as Brexit and coronavirus spread are the main drivers for speculators.

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