EUR/USD Upbeat Ahead of the European Open

EUR/USD - H1

The pair started the week on the back foot, as optimism around the Omicron variant and its severity, helped the US Dollar more, since it is supportive of the Fed's faster tightening prospects.

US foremost infectious diseases expert, Dr Anthony Fauci said on Tuesday that "it appears that with the cases that are seen, we are not seeing a very severe profile of disease", in regards to Omicron. [1]

Sentiment is a bit on the cautious side so far today, as fears around China's property markets resurface and we also see renewed tensions in Russian-Western relations over Ukraine. The White House said that "U.S. and our Allies would respond with strong economic and other measures in the event of military escalation" after a call between US President Biden and Russian President Putin [2], while EU Commission President von Der Layen commented that "We will respond to any further aggressions, by scaling-up and expanding existing sanctions" [3].

The common currency tested 1.1234 on the downside yesterday, as per our last analysis, but stages a rebound today and reclaims its EMA100. As such, immediate pressure eases and it may find the opportunity to push higher, but we are still cautious around its upwards prospects.

The next key resistance will need a strong catalyst in order to be challenged and is provided by the descending trend-line from October highs and the 38.2% Fibonacci of the "October High/November Low" drop (1.1380-3).

This area has already been rejected last week and the overall bias remains down and EUR/USD is contained by 1.1300 thus far. Given these factors, risk for fresh December lows (1.1226) persists, although it may be early for a drop below those of 2021 from last month (1.1184).

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No tier-1 data are expected today and the pair's next leg is probably going to be determined by risk trends, so we wait to see in what mood will the European markets open.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 08 Dec 2021 https://www.whitehouse.gov/briefing-room/press-briefings/2021/12/07/press-briefing-by-white-house-covid-19-response-team-and-public-health-official-2/

2

Retrieved 08 Dec 2021 https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/07/readout-of-president-bidens-video-call-with-president-vladimir-putin-of-russia/

3

Retrieved 17 May 2022 https://twitter.com/vonderleyen/status/1468233042711830530

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