EUR/USD and GBP/USD hit hard in risk-off move

EUR/USD and GBP/USD suffer sharp losses at the open, yet it is the pound that looks most at risk as the new Covid-19 strain piles pressure on as Brexit talks reach a critical moment.

EUR/USD starts to regain ground after morning pullback

EUR/USD has slumped in early trade, with the pair falling back into an ascending trendline. With a wider uptrend in play, we would need to see $1.2125 swing low broken for a more bearish picture to emerge.

However, while we have seen a deep retracement, the fact we are starting to regain ground around the 76.4% Fibonacci level does highlight the potential for a bullish continuation from here.

GBP/USD tumbles as Covid and Brexit fears pile pressure on the pound

GBP/USD has seen sharp losses at the start of this crucial week, with another weekend of Brexit talks failing to reach any positive conclusion. However, the increasing likeliness of a no-deal Brexit has been accompanied by a new strain of Covid-19 which could see the UK locked down for months.

With Europe shutting their borders to the UK, it comes as no surprise to see the pound on the back foot. Brexit talks are scheduled to continue today, bringing the likeliness of further volatility for the pound. Price has broken below the $1.328 support level, bringing about a fresh bearish signal for the pair. The next key support level in view comes in the form of the $1.3134 swing low. Ultimately, we are looking at a currency pair that is going to remain volatile and unpredictable as it reacts to news in the lead up to the Brexit deadline.

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