EUR/USD is bearish, as the Eurozone’s second wave of corona virus is accelerating and threatening to slow down the already fragile economic recovery. France announced a daily record of new corona virus infections on Sunday, with the confirmed figure reaching 52,000. Italy announced a partial lockdown, which will remain in effect until Nov. 24.  And Spain has approved a state of emergency and announced a national curfew from 11 p.m. to 6 a.m. to contain the virus.

These new restrictions, which is less severe than the ones seen in the second quarter, are likely to have a negative impact on the economy. The Eurozone is already facing deflationary pressures. The common currency bloc’s inflation fell deeper into the negative territory in September, raising pressure on the European Central Bank to ramp up stimulus.

According to a recent forecast, the central bank is likely to boost its pandemic bond-buying program by 400 billion euros ($470 billion) in December. However, with Eurozone nations reimposing economically-painful measures to control the second wave of the corona virus, markets may begin pricing a bigger boost in ECB’s stimulus.

The US election polls do still give Biden a commanding lead with just over a week to go in financial markets. However, there are plenty of activities and alternative themes to drive price action elsewhere.

The stimulus package has been a driver of risk appetite and a pro-dollar on a lack of progress at times, but investors could start to weather news that a US stimulus bill may not be forthcoming ahead of the election.

EUR/USD 4 Hour Chart:

Support: 1.1809 (S1), 1.1759 (S2), 1.1731 (S3).

Resistance: 1.1887 (R1), 1.1915 (R2), 1.1965 (R3).

The second wave of corona virus impacts the Euro zone negatively and we expect a bearish trend for EUR/USD.