Forex News

13:07:30 02-12-2021

EUR/USD looks bid, advances to daily highs near 1.1340

  • EUR/USD posts decent gains and moves to the 1.1330/40 region.
  • Global markets remain mostly side-lined on omicron concerns.
  • October’s Unemployment Rate in the euro area eased to 7.3%.

The single currency regains some optimism on Thursday and lifts EUR/USD to the 1.1330/40 band amidst a mild offered bias in the greenback.

EUR/USD looks to COVID, risk trends

EUR/USD manages to pick up some pace and leave behind Wednesday’s negative price action, always above the 1.1300 yardstick and against the backdrop of increasing cautiousness in the global markets in response to omicron concerns.

While there is still a lot of uncertainty regarding the omicron variant, its resistance to current vaccines and its impact on the global growth prospects, a rising number of nations are already planning to re-impose lockdown measures and restrictions, which could ultimately affect the demand.

On the dollar side, investors appear to have already digested Powell’s hawkish testimony on Wednesday, while US yields reverse the recent weakness and return to the positive territory.

In the domestic calendar, the jobless rate in the euro area dropped to 7.3% in October. Across the pond, Challenger Job Cuts is due seconded by the usual weekly Claims.

What to look for around EUR

EUR/USD manages well to keep the trade above the 1.1300 mark amidst an erratic week so far. The corrective downside in the greenback propped up the recent move higher in spot, although this is regarded as temporary. Fresh coronavirus concerns sparked after the new variant omicron was discovered last week is likely to keep the demand for the safe haven on the raise at least in the very near term. In the meantime, the outlook for the European currency remains well into the bearish territory on the back of the ECB-Fed policy divergence, increasing COVID-19 cases in Europe as well as some loss of momentum in the economic recovery in the euro area, as per some weakness observed in key fundamentals.

Key events in the euro area this week: EMU Unemployment Rate (Thursday) – EMU/Germany Final Services PMIs, ECB’s Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the region. Increasing likelihood that elevated inflation could last longer. Pick-up in the political effervescence around the EU Recovery Fund in light of the rising conflict between the EU, Poland and Hungary on the rule of law. ECB tapering speculations.

EUR/USD levels to watch

So far, spot is gaining 0.16% at 1.1337 and faces the next up barrier at 1.1382 (weekly high November 30) followed by 1.1464 (weekly high Nov.15) and finally 1.1527 (55-day SMA). On the other hand, a break below 1.1186 (2021 low Nov.24) would target 1.1185 (monthly low Jul.1 2020) en route to 1.1168 (low Jun.19 2020).

News provided by the portal FXStreet
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