EUR/USD Analysis – December 23, 2021

Daily Price Outlook

The EUR/USD was closed at $1.1324 after placing a high of $1.1343 and a low of $1.1264. EUR/USD continued its bullish momentum for the third consecutive session and extended its gain mainly because of the US dollar's weakness along with the increased risk appetite in the market. Despite some negative developments surrounding Europe's economy, the single currency Euro kept on gathering strength due to the improved risk appetite in the market and pushed EUR/USD higher for the 3rd consecutive session on Wednesday.

The World Health Organization's European head has once again warned European countries to brace for a significant surge in coronavirus infections and advised people to get a booster shot to protect themselves from the widespread virus. According to Hans Kluge, 38 countries out of 53 in the WHO's European region have detected the Omicron variant. He warned that another storm of coronavirus infections was coming, and most vulnerable people should get booster shots as soon as possible as, for the moment, it was the single most crucial defence against Omicron.

Moreover, apart from Omicron, another risk was affecting Europe's economic recovery: the prevailing energy crisis. A report from Bloomberg suggested that the relentless surge in European energy prices forced industrial giants to cut production and threatened economic recovery. As a result, industries, including fertilizers and metals, were facing reduced production as energy costs were spiking to fresh records day after day.

Despite the lingering energy crisis and Omicron's concerns, the Euro rose as European investors emphasized the falling value of the US dollar and the current risk-on market sentiment.

There was no economic data released from Europe, and on the US side, at 18.30 GMT, the quarter's final GDP rose to 2.3%, against the predicted 2.1%, and supported the US dollar. The final GDP price index for the quarter remained unchanged at 6.0%. At 20:00 GMT, the CB Consumer Confidence from the US in December improved to 115.8 from the expected 111.1, which supported the US dollar. Existing home sales fell to 6.46 million against the forecasted 6.55 million and weighed on the dollar. Most of the data from the US supported the dollar and limited the rising prices of EUR/USD on Wednesday.

Meanwhile, despite the release of positive economic data from the United States, the dollar remained under pressure due to increased risk appetite fuelled by alleviating fears about the Omicron variant. A study from South Africa explained that the rate of hospitalization and severe cases were less affected by the Omicron variant than that caused by the Delta variant. The study helped keep the risk-on market sentiment alive and pushed the riskier currency pair EUR/USD to the upside on Wednesday.

EUR/USD Intraday Technical Levels

Daily Technical Levels

Support Resistance

1.1277 1.1356

1.1231 1.1389

1.1198 1.1436

Pivot Point: 1.1310

EUR/USD - Technical Outlook

The EUR/USD is trading at the 1.1345 level, gaining immediate support at the 1.1308 level. The direct currency pair’s immediate resistance stays at 1.1355 level, and the closing of candles below the mark adds a bearish pressure on it. A rise in buying pressure and break above 1.1353 resistance level exposes the pair towards 1.1386 or 1.1430 resistance levels. Alternatively, the support levels continue to hold at 1.1308 and 1.1230. A bearish breakout increases the chances of a downtrend until the 1.1197 support zone. All the best!