EUR/USD Analysis – December 02, 2021

Daily Price Outlook

The EUR/USD pair ended the day at $1.1320, having reached a high of $1.1359 and a low of $1.1303. The EUR/USD dropped on Wednesday amid the strength of the US dollar and the prevailing risk-off market sentiment. The US dollar index surged on Wednesday to a 96.04 level, despite unfavourable macroeconomic data released on the day. The greenback was gathering strength on the back of its safe-haven status as concerns about the spread of Omicron variants emerged in the market after the US reported its first Omicron variant case on Wednesday.

Meanwhile, Fed Chair Jerome Powell said that the Fed should increase tapering economic support to curb rising inflation. However, traders kept their focus more on the rising spread of the Omicron variant rather than on the hawkish comments from Powell and triggered a risk-off market mood. The riskier currency pair EUR/USD then faced pressure from the market's risk-off sentiment on Wednesday.

On the data front, German retail sales fell by 0.3% at 12:00 GMT, compared to the expected 1.0%, weighing on the single currency Euro. At 13:15 GMT, the Spanish manufacturing PMI fell to 57.1 from the predicted 57.9 and weighed on the single currency, the euro. At 13:45 GMT, the Italian manufacturing PMI surged to 62.8, against the forecasted 61.1 and supported the euro. At 13:50 GMT, the French Manufacturing PMI also improved to 55.9, against the predicted 54.6 supported by Euro. At 13:55 GMT, the German final manufacturing PMI remained flat at 57.4. At 14:00 GMT, the final manufacturing PMI for the whole bloc also remained unchanged at 58.4. Macroeconomic data from the whole bloc came in mixed and kept the currency pair under pressure on Wednesday.

From the US side, at 18:15 GMT, the ADP Non-Farm Employment Change rose to 534K, against the forecasted 525K, and supported the US dollar. That added further pressure on the EUR/USD pair. At 19:45 GMT, the final manufacturing PMI in November fell to 58.3 from the predicted 59.1 and weighed on the US dollar. Construction spending remained flat at 0.2%. The ISM Manufacturing Price Index fell to 82.4 from an expected 85.5, weighing on the US dollar. These unfavourable macroeconomic figures from the US kept the losses in EUR/USD limited for the session.

Furthermore, the euro was also low on Wednesday as more and more countries across Europe closed their borders to travellers from South Africa and neighbouring countries on the back of rising cases of the Omicron variant. The virus has spread to the UK, which raised fears of further spread to other European countries and kept the Euro under pressure, which ultimately added to the losses of the EUR/USD pair.

EUR/USD Intraday Technical Levels

Support Resistance

1.1252 1.1400

1.1170 1.1466

1.1105 1.1548

Pivot Point: 1.1318

EUR/USD - Technical Outlook

On Thursday, the EUR/USD continues trading sideways in a narrow trading range of 1.1385 – 1.1255 level. Technical side hasn’t changed a lot as traders awaits the US NFP figures later this week. On the bearish side, a breakout of 1.1318 levels exposes the EUR/USD pair towards 1.1255 or 1.1175 levels. Further on the lower side, the next support prevails at 1.1155. Conversely, the resistance stays at 1.1382, and above this, 1.1466 and 1.1550 will be acting as a resistance for now, all the best!