As was mentioned in yesterday’s article, the fate of the Euro would be tied to developments regarding Covid 19, and not economic news and this rang true in yesterday’s trading session as the European currency jumped around 75 points against the greenback.
The trigger was global risk sentiment which is remaining well supported by easing fears about the potential economic fallout from the new Omicron variant of the coronavirus. The positive momentum got an additional boost after Pfizer said that during lab tests, the third dose of their COVID-19 vaccine was enough to stop the new Omicron variant of the virus in its tracks.
As we enter today’s European trading session the greenback has pulled back slightly after the release of disappointing business data from Europe. The latest trade balance figures from Germany hit the market at 12.5 billion Euros against analysts’ expectations for a figure of 13.4 Euros and shows Europe’s largest economy still has some way to go before hitting full recovery.
Looking further ahead today, t’s a relatively quiet day on the economic calendar although the latest Jobless claims figures from the US maybe in focus and following weaker than expected NFP numbers last week there may be a jump in unemployment claims which should benefit the Euro.
On the chart, we can see that the EUR/USD currency pair has now run into strong resistance in 2 major areas.
The first is the $1.1342 mark which has been a thorn in the Euro’s side for the past 3 weeks and once again in today’s trading session it has been solidly rejected at this level.
The 2nd resistance level is a descending trend line that had acted as support for EUR/USD throughout the summer months and into October. There was a break below this trendline in November and it now acting as resistance.
To break both of these resistance levels today we would need to see more positive news regarding the containment of the new omicron virus or a major uptick in the number of jobless claims from the US.
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