Daily Price Outlook
The EUR/USD closed at $1.1293 after hitting a high of $1.1316 and a low of $1.1280. The EUR/USD reversed its course and dropped on Friday amid the strength of the U.S. dollar as well as the prevailing risk-off market sentiment. The US Dollar Index surged on Friday and reached a level of 96.28. The U.S. dollar's gains were also limited amid the thinned volumes with discovering a new potentially vaccine-resistant coronavirus variant named Omicron, which raised fears of fresh harm to the global economy.
The World Health Organization studied this new variant of the coronavirus, which has been detected in South Africa, which triggered the selloff in risk-associated currency pairs like EUR/USD. The emergence of a new coronavirus variant brought back concerns in the market that countries could re-impose lockdown and travel restrictions. Given the potential vaccine resistance of the new coronavirus variant, many countries in Europe, including France, Germany, Italy, and the United Kingdom, the United States, and Canada, imposed travel restrictions on visitors from neighboring South African countries.
At 12:00 GMT, German import prices increased by 3.8% versus the expected 2.0%, bolstering the Euro and limiting the currency pair EUR/USD decline. At 14:00 GMT, the M3 money supply for the year also increased by 7.7%, against the predicted 7.4%, and supported the Euro, which prevented a further loss in EUR/USD. The private loans for the year increased 4.1% against the anticipated 4.0% and supported the Euro, which limited the loss in EUR/USD.
Meanwhile, the single currency euro was already down as the central bank of Europe was hesitant to accept the hawkish calls for rate hikes or to end the PEPP, and the latest variant of the coronavirus offered another reason for a dovish stance. Hence, the Euro faced heavy pressure and dragged EUR/USD further to the downside.
EUR/USD Intraday Technical Levels
Pivot Point: 1.1296
EUR/USD - Technical Outlook
The EUR/USD's technical outlook has shifted bullish. For example, the Relative Strength Index (RSI) tool has risen above 50 for the first time in a week, and the pair is trading above the 20-period simple moving average (SMA). The pair is currently targeting the 50-period SMA at 1.1280, with further advances toward 1.1300 (psychological level) possible. If buyers can convert the latter into support, the next resistance level is at 1.1370. (static level). Supports on the downside are found at 1.1230 (20-period SMA), 1.1200 (psychological level), and 1.1185. (2021 low). All the best!
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