EUR/USD Soft After a Mixed Week

EUR/USD - H1

During last week, markets continued to operate under Omicron's cloud, while Fed/ECB policy divergence was ushered again into the spotlight. Fed Chair Powell pointed to faster QE tapering timeline [1], amidst hawkish comments from other officials as well, while his European counterpart said on Friday that it is very unlikely that rates will rise in 2022 [2].

The week ended with the US Jobs report, which showed the addition of just 210K in November, compared to 546K (revised) prior print. However, the Unemployment Rate dropped to 4.2% (from 4.6% prior) and the Participation Rate picked up to 61.8% (vs 61.6% prior) – still well below pre-pandemic levels though.

All these caused volatility and two way-action, leading to an inconclusive week for EUR/USD, with the technical outlook pretty much unchanged from our last analysis.

Today, the common currency is under pressure, and Tuesday's rejection of 38.2% Fibonacci of the "October High/November Low" drop has created risk for fresh 2021 lows (1.1184), with the first support at 1.1234.

On the other hand, improved broader sentiment could provide support to the pair and give it the chance to push towards 1.1334, but we still struggle to see how it can challenge the 1.1380-1.1410 area.

Today's economic calendar does not future any tier-1 economic releases, so risk mood is likely to determine the pair's movement.

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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 06 Dec 2021 https://www.c-span.org/video/

2

Retrieved 03 Jul 2022 https://twitter.com/Lagarde/status/1466686551786770433

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