EUR/USD is still at risk of Omicron Covid
EUR/USD fell on prospects that the EU will become the epicenter of the new covid strain, Omicron. As of this writing, EUR/USD is trading from 1.1277 to the lows of 1.1273 and 1.1286, with little or no change throughout the day in the early-week range.
According to the European Center for Disease Control and Prevention (ECDC), at least 6,430 cases of the strain have been confirmed in 70 countries since the discovery in late November. This option is said to be becoming dominant in Europe. Although European countries first reported cases of the disease, this strain has not yet been found across the continent.
Meanwhile, concerns over new options boosted risk sentiment on Monday and the FTSE 100 closed 0.73% lower at 654. The S&P 500 closed 0.9% lower at 4,668.97 on similar margins. The Nasdaq Composite Index fell 1.4% to 15,413.28, and the Dow Jones Industrial Average fell 0.9% to 35,650.95. The yield on the 10-year U.S. Treasury fell 8 basis points to 1.41%, and the yield on the 2-year Treasury bond fell 3 basis points to 0.63%. EUR/USD reduced the loss to around 25 pips to 1.1290.
This week the central bank will be in the spotlight. “Until now, the European Central Bank (ECB) considered inflation to be temporary, but it is becoming more and more elastic,” said ANZ Bank analyst. The analyst continued: “The US Federal Reserve has recently changed its mind on inflation and it is very likely that the ECB will change its stance at its meeting later this week. Inflation in the euro area is high, with consumer prices currently at a record 4.9%, well above the 2% target.” “Unlike the United States, the economic recovery in Europe is much more fragile and the region is currently experiencing a wave of omicron cases. At this stage, the ECB expects inflation to fall to 1.5% in 2023 and will soon release its inflation forecast for 2024, analysts explained.
The Fed is having a two-day meeting so they can diversify the market based on what they see, but for now I think they’re starting to be limited to a small range of up to a year. As Christmas approaches, liquidity in the market is becoming an issue and there will be little momentum, but once most traders are gone, we can see a sudden surge in both directions. , essentially meaning nothing. The downside of 1.12 continues to be significant because if you fall below that level, you can accelerate to 1.10. On the other hand, I expected the 50-day EMA to act as resistance, so keep that in mind.