UK Prime Minister Boris Johnson has announced a second broad lockdown from Thursday, November 5, and until December 2. The PM has said, “The virus is doubling faster, that we can conceivably add capacity.”  Leaving home is restricted to limited, essential activities. 

Johnson has also announced that the furlough scheme will extend for another month. Nevertheless, the UK will likely struggle. 

Chief medical officer Chris Whitty explained that there are now some 50,000 cases per day and that several hospitals have more COVID-19 patients than in the spring. Chief scientific officer, Sir Patrick Vallance, warned that admissions to hospitals could top the peak of the previous wave within the next six weeks.

Speculation about a lockdown circulated ahead of the announcements. France and Germany announced similar measures on Wednesday. The move comes ahead of the Bank of England’s rate decision on Thursday, alongside its quarterly Monetary Policy Report. The BOE may announce sub-zero borrowing costs. 

More GBP/USD: Trump or Biden? Brexit, central banks, covid all promise explosive week

 
  • XAU/USD lost more than 1% last week and closed near $1,880.
  • Bearish pressure could gather strength is gold drops below $1,860.
  • 100-day SMA at $1,890 aligns as first resistance.

The XAU/USD pair suffered heavy losses on Wednesday and Thursday but staged a rebound on Friday. Despite the fact that the pair gained 0.6% on the last day of the week, it closed 1.2% lower on a weekly basis at $1,879. 

XAU/USD technical outlook

On Thursday, gold touched its lowest level in a month at $1,860, where the Fibonacci 61.8% retracement of June-August rally is located. Although strong support seems to have formed around that level with the price turning north on Friday, the pair closed the third straight day below the 100-day SMA at $1,890. Unless XAU/USD successfully makes a daily close above $1,890, it is likely to retest $1,860. Below $1,860, $1,850 (September 24/26 low) could be seen as the next target.

On the upside, $1,890 (100-day SMA) is the initial hurdle ahead of $1,900 (psychological level/20-day SMA) and $1,916 (50-day SMA).

Gold daily chart

  • El euro encuentra soporte en 1.1640 después de una liquidación de cinco días.
  • Los bloqueos de COVID-19 y el BCE han hecho caer al euro.
  • Las elecciones estadounidenses serán un impulsor clave del EUR / USD la próxima semana.

El euro extendió su tendencia bajista por quinto día consecutivo y está en camino de una caída semanal del 1.75% para cerrar la semana cerca de 1,1640 con mínimos de varios meses a la vista en 1,1610.

Los bloqueos del BCE y COVID-19 hacen que el euro caiga

El euro ha sido golpeado esta semana por las preocupaciones del mercado sobre el aumento de las infecciones por COVID-19 en Europa y el efecto de las medidas de distanciamiento social para frenarlas. Los nuevos bloqueos introducidos por Francia y Alemania y las limitaciones más estrictas aplicadas en Italia y España están dando la alarma sobre el impacto en la frágil recuperación económica.

Más allá de eso, el BCE insinuó el jueves la posibilidad de desatar nuevas medidas de estímulo en diciembre para contrarrestar el impacto negativo de la pandemia, que impulsó el impacto negativo en la moneda común.

Por otro lado, el sentimiento de aversión al riesgo provocado por el aumento de las infecciones por coronavirus en Europa y EE.UU. y la incertidumbre sobre el resultado de las elecciones estadounidenses han favorecido al dólar como refugio seguro, que repuntó a máximos de cuatro semanas frente a una canasta de monedas.

La semana que viene, las elecciones presidenciales de Estados Unidos serán el evento principal. El mercado está valorando la victoria de Biden que podría empujar al dólar a la baja, anticipando la aprobación de un gran paquete de estímulo por parte del gobierno demócrata. Sin embargo, una elección impugnada aumentaría la incertidumbre e impulsaría la demanda de dólares en una carrera por la seguridad.

Niveles técnicos 

                                                   
 

  • The euro finds support at 1.1640 after a five-fay sell-off.
  • COVID-19 lockdowns and the ECB have sent the euro tumbling.
  • The US elections will be a key EUR/USD driver next week.

The euro extended its downtrend for the fifth consecutive day and is on track for a 1.75% weekly decline to close the week near 1.1640 with 1.1610 multi-month lows on sight.

ECB and COVID-19 lockdowns send the euro tumbling

The euro has been hammered this week by market concerns about the increase of COVID-19 infections in Europe and the effect of the social distancing measures to curb them. The new lockdowns introduced by France and Germany and the tighter limitations applied in Italy and Spain are raising the alarm about the impact on the fragile economic recovery.

Beyond that, the ECB hinted on Thursday to the possibility of unleashing new stimulus measures in December to counteract the negative impact of the pandemic, which boosted negative impact on the common currency.

On another note, the risk-averse sentiment triggered by the rise of coronavirus infections in Europe and US and the uncertainty about the outcome of US elections have favoured the safe-haven USD, which rallied to four-week highs against a basket of currencies.

Next week, the US presidential elections will be the main event. The market is pricing in a Biden’s victory that might push the USD lower, anticipating the approval of a large stimulus package by the Democrat government. A contested election, however, would increase uncertainty and boost dollar demand on a rush for safety.

Technical levels to watch