EUR/USD Analysis – December 29, 2021

Daily Price Outlook

The EUR/USD pair closed at $1.1309 after hitting a high of $1.1335 and a low of $1.1289. The EUR/USD currency pair moved lower on Tuesday amid the rising strength of the US dollar and the declining value of the single currency euro. The shared currency came under pressure after several European countries started reporting record-high COVID-19 cases due to the increased spread of the Omicron variant across the continent.

On Tuesday, France reported a record high of 179,807 new confirmed cases on a single day, which was by far the highest daily number since the start of the pandemic. Italy, Cyprus, Greece, and Portugal also reported record-high daily coronavirus cases despite having one of the world's highest vaccination rates.

Given the rising number of coronavirus cases, France has announced new COVID-19 measures, making working from home mandatory from January 3rd for at least three days per week, and public gatherings will be limited to 2000 people indoors and 5000 people outdoors. These rules will be in place for at least three weeks. The rising spread of the Omicron variant and restrictions imposed by European countries had a negative impact on the single currency euro, dragging EUR/USD further to the downside.

On the other hand, the US dollar was high onboard due to its safe-haven status, which was fueled by rising fears surrounding the Omicron variant. The latest studies suggested that the Omicron variant spreads 70% faster than other variants, raising investors' fears and supporting the greenback. However, the study also stated that Omicron was less likely to cause severe infection in vaccinated people and those with booster shots.

Due to favorable macroeconomic figures released on Tuesday, the US dollar was also high on board. At 19:00 GMT, the HPI from October surged to 1.1% against the anticipated 0.9% and supported the US dollar. The S&P/CS Composite-20 HPI fell to 18.4%, versus the expected 18.6%, and was weighted by the US dollar. At 20:00 GMT, the Richmond Manufacturing Index improved to 16 from an estimated 11 and supported the US dollar.

On Tuesday, the strong US dollar added further downside pressure on the currency pair EUR/USD. The US Dollar Index, which measures the greenback's value against the basket of half a dozen currencies from major economies, rose to the 96.23 level on Tuesday and recovered some of its previous session's losses, causing a decline in the EUR/USD pair.

EUR/USD Intraday Technical Levels

Daily Technical Levels

Support Resistance

1.1287 1.1333

1.1266 1.1356

1.1242 1.1378

Pivot Point: 1.1311

EUR/USD - Technical Outlook 

The technical side of the EUR/USD continues to remain unchanged at the 1.1304 level, facing strong resistance at 1.1309. This particular resistance is being extended by an intraday pivot point level and the formation of candles below this is signaling a downtrend. The EUR/USD continues to trade choppily, maintaining a narrow range of 1.1320 – 1.1290. It's gaining immediate support at the 1.1301 mark, along with major resistance at the 1.1333 level. The closing of hourly candles below the 1.1309 level adds selling pressure on EUR/USD. A surge in buying pressure and a break above the 1.1309 resistance level exposes the pair towards the 1.1330 or 1.1353 resistance marks. Conversely, the support marks continue to stay at 1.1289 and 1.1266. All the best!