Oct 15 (Reuters) - Fundamentals, yields and positioning are the major drivers of currencies, and though the market is long EUR/USD, fundamentals appear set to lead the next move as Europe fights to contain a COVID-19 resurgence heading into winter .
With EUR/USD stalled around the midpoint of its September range, success in controlling the outbreak is likely to be the major factor for the euro zone economy and hence EUR/USD in the coming weeks, unless there is a shock result in the November U.S. presidential election.
Spain , Portugal , France and Germany are among countries working on, or implementing, measures to curb a second coronavirus wave. The economic impact of these restrictions will be the major factor for governments and European Central Bank policy, forecasts, and thus the EUR/USD.
Morgan Stanley's Oct 12 FX Positioning tracker showed that USD shorts and EUR longs increased at mildly oversold and overbought levels respectively. EUR/USD is off only 0.6% this week, so positioning is a modestly negative factor.
Charts show daily momentum studies, 5, 10 and 21 daily moving averages only a touch negative, as the pair consolidates in a broad 1.1600-1.2000 range since its near-13% gain from the March 1.0636 base to the September peak. Technically there is little short-term bias.
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(Andrew Spencer is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.