FOREX-Dollar pinned near major support as vaccine progress weighs

By Wayne Cole
SYDNEY, Nov 23 (Reuters) - The U.S. dollar marked time on
Monday as the prospect of an early rollout of coronavirus
vaccines was offset by concerns about economic restrictions to
control the spread of the virus, leaving safe-haven assets in
limbo.
A holiday in Japan also made for sparse liquidity and made
investors reluctant to test major chart barriers on a number of
dollar pairs.
The euro was hovering at $1.1858 EUR= , having repeatedly
failed to break above the $1.1993 resistance level last week. It
needs to clear the November top of $1.1919 to extend its
uptrend.
Analysts at Capital Economics are bullish on the single
currency's longer-term outlook.
"We think that the exchange rate will rise further over the
next few years against a backdrop of lower euro-zone stability
risks; an increased real yield gap between the euro-zone and the
U.S.; and a continued recovery in the global economy," they
wrote in a note.
They lifted their forecasts for the euro and now see it at
$1.2500 by the end of 2021 and $1.3000 at the close of 2022, up
from $1.2000 and $1.2500 previously.
The dollar has also been drifting slowly lower on the
Japanese yen and last stood at 103.80 JPY= , just above chart
support at 103.62. A break there would see a re-test of the
November trough of 103.16, which was the lowest since the market
turmoil of March.
Against a basket of currencies, the dollar was a shade
softer at 92.374 =USD and again uncomfortably close to support
at 92.129 and 91.373.
Promising news on vaccines were weighing on the safe-haven
dollar. The first people in the United States could receive a
COVID-19 vaccine a day after the U.S. Food and Drug
Administration grants approval in mid-December. And Britain could give regulatory approval to
Pfizer-BioNTech's COVID-19 vaccine this week. On the other hand, millions of Americans are expected to
ignore warnings to stay home for the Thanksgiving holiday, while
Germany might have to extend its lockdown until mid-December.
The rash of coronavirus restrictions across the United
States has stoked speculation the Federal Reserve might have to
ease monetary policy further, particularly with no fiscal
stimulus deal in sight.
Last week's surprise move by the U.S. Treasury Department to
end some emergency lending programs only added to the
speculation.
That will heighten the focus on the minutes of the U.S.
central bank's last policy meeting, which are due to be released
on Wednesday. The minutes are expected to confirm Fed
policymakers discussed adding to the bank's asset-buying plans.
"The minutes should help gauge whether our call for a
lengthening of the maturity mix as soon as the December meeting
remains on track," analysts at TD Securities wrote in a note.