The dollar bounced off an almost three-month low against a basket of currencies hit on Monday following optimism over another COVID-19 vaccine as the index approached a technical support level that if broken, could signal further weakness for the greenback. The dollar had weakened as risk appetite got a boost after AstraZeneca said that its vaccine could be about 90% effective and it would prepare to submit data to authorities around the world that have a framework for conditional or early approval. Investors are balancing the prospect of a closer rollout of COVID-19 vaccines against worsening U.S. economic data as a rise in COVID-19 cases again leads to business shutdowns.
It’s a relatively busy day ahead on the economic calendar for the EUR. Finalized 3rd quarter GDP and November IFO Business Climate Index figures from Germany are due out. Late in the day, ECB President Lagarde is due to speak. Any monetary policy chatter will provide the EUR with direction. There are no material stats due out from UK, leaving the Pound in the hands of Brexit and market risk sentiment. Across the Pond, it’s also a relatively busy day ahead for the U.S Dollar. November consumer confidence figures are due out late in the day. With the U.S reintroducing containment measures to curb the spread of the COVID-19 pandemic, a fall in confidence is likely. Weaker retail sales figures from last week and a further decline in consumer confidence would weigh on riskier assets. Hopes of a COVID-19 vaccine, however, should limit the damage.