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EUR and GBP are sinking deeper and deeper

Pair EURUSD continues to fall, making a new low this year at 1.11900. The dollar is incredibly strong and is a big bullish momentum. The euro, unlike the dollar, is under great pressure with an increase in the number of newly infected with Coronavirus and the announcement by some European countries of a potential lockdown.

Bullish scenario:

We need a new positive consolidation and growth of EURUSD above 1.12500 to form the bottom of the chart.
Our next upper resistance is at 1.13000, where we can get potential support in the MA20 moving average.
Then we need to pay attention to the resistance at 1.13500, and here we had a previous rejection and an attempt to move to the bullish trend.

Bearish scenario:

We need continued negative consolidation and new testing of the 1.120000 support zone.
Break below brings us to the first following lower support at 1.11500.
The picture is very bearish, and if the pair does not find support at the current level, then we will go down to much lower levels on the chart.

GBPUSD chart analysis

Pair GBPUSD, just like EURUSD, recorded its new lows this year, forming a new lower low at 1.33327. If this continues soon, we can see a pair and at lower levels on the chart. And the next first potential support is at 1.33000.

Bullish scenario:

We need a new positive consolidation and a return of GBPUSD above 1.34000 to form a support zone on the chart.
Above 1,34500, we get additional support in the MA20 moving average.
In zone 1.35000, we can expect the next resistance because our previous lower high is there.

Bearish scenario:

We need a continuation of this negative consolidation and a break below the previous lower low.
The break below this support descends us into the period of movement from December last year.

Market overview

German business morale worsened for the fifth month in a row in November, as supply bottlenecks in production and an increase in the number of people infected with coronavirus blurred the growth prospects of Europe’s largest economy, the research showed on Wednesday.

The Ifo Institute stated its business climate index drop to 96.5 from 97.7 in October. A poll by Reuters analysts indicated a November reading of 96.6.

“Supply bottlenecks and the fourth wave of coronavirus are a challenge for German companies,” said Ifo President Clemens Fuest.

The survey showed that company executives were less satisfied with the current business situation, and expectations for the next six months stay more negative.

Despite record-high orders, German carmakers and other manufacturers have been forced to cut production due to a shortage of raw materials and semi-finished products such as microchips.

“Industrial production suffers from a lack of materials, and with the brutal fourth wave of the coronavirus, a well-known stress factor for the service sector is now being added,” said VP Bank analyst Thomas Gitzel.

Gitzel said that all signs now point to a decline in total economic production in the last quarter of this year.

Eurozone governments should continue to spend the coming years to help recover from the pandemic, albeit to varying degrees depending on debt levels, and use cash from the EU’s recovery fund to increase investment, the European Commission said, on Wednesday.

The commission announced that 2022 would be the year when European countries will switch from responding to the crisis to helping with recovery, especially through money from the EU Recovery Fund, which will finance 24 percent of all measures to support recovery.

The commission expects governments to spend 40% of the grant component, totaling 338 billion euros, from the recovery fund next year.

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