EUR/USD dives to 1.1730 area amid broad-based dollar strength

• EUR/USD drops to 1.1730 as the US dollar gathers pace.
• A deteriorated market mood supports the safe-haven USD.
• The euro drops 0.65% on the day and breaks its near-term positive trend.

The euro’s reversal from the 1.1835 top reached last week has accelerated on Tuesday with the US dollar stronger across the board. News reports about Johnson & Johnson pausing their COVID-19 study have dampened hopes of a coronavirus vaccine, weighing on investors' mood.

The dollar regains lost ground as market sentiment deteriorates

The US dollar is appreciating against its main rivals, with the major stock indexes in the red. Johnson & Johnson’s decision to halt vaccine trials and the rejection of Trump’s $1.8 trillion stimulus proposal have hammered the moderate appetite for risk witnessed last week.

Furthermore, the German ZEW index has shown a larger-than-expected decline of the economic sentiment in October, adding negative pressure on the common currency. According to the survey, the increase of coronavirus infections in Europe and the growing uncertainty about the Brexit outcome and the US presidential elections are dampening the Eurozone’s economic prospects.

EUR/USD breaks the near-term positive trend

From a technical perspective, the euro has broken the upside-trending channel from late-September lows, with a 0.65% decline so far today. On the downside, below 1.1730, EUR/USD might seek support at 1.1700 (psychological level) before aiming towards 1.1610 (Sep. 25 low). On the upside, the pair might find resistance at the 50-day SMA at 1.1795 and above here, at 1.1830 (Oct. 9 high) and 1.1870 (Sept 18, 21 highs).

Technical levels to watch