- The shared currency declines on Monday as market sentiment improves, as concerns about the omicron variant of COVID-19 ease.
- Broad strength of the US dollar across the board, weighing on the EUR / USD.
- EUR / USD sellers, to resume the move lower, will need to break below the 200 hourly SMA at 1.1271.
On Monday, the pair EUR/USD it falls during the American session, trading at 1.12880 at the time of writing. Since the beginning of the Asian session, the shared currency declined as market sentiment improved on positive news from the South African health authorities. The dollar is up against most of the G8 currencies in the currency markets, with the exception of the AUD and CAD.
Friday’s price action was exacerbated by news of COVID-19 omicron in tight liquidity conditions after the Thanksgiving celebration. In addition, the authorities of the World Health Organization (WHO) raised the alarm with some countries banning flights from South Africa and some African countries. That would last unless scientists could show that, while highly transmissible, the new variant is not as dangerous as the delta. Until that news arrives, market participants will remain cautious, waiting for more information.
That said, the USD weakened across the board, with the US dollar index closing near a psychological 96.00 as investors reduced bets that the Federal Reserve would raise rates threefold in 2022 as the Money market futures have been priced in just two increases, pushing the third to 2023. That is due to assessing what the impact of the new variant of the coronavirus would be on the world economy.
Meanwhile, on Monday, the USD regained some ground against the shared currency. At the beginning of the Asian session, the EUR / USD broke below 1.1300, printing a daily low near the 50 hourly simple moving average (HSMA) at 1.1258, although in recent hours it jumped above the 50 and 200 SMA at current levels.
On the economic agenda, the Eurozone released the HICOP for Germany for November, which rose 6%, higher than the estimated 5.4%. Meanwhile, on the other hand, pending US home sales for October increased monthly by 7.5%, more than the 1% expected.
EUR / USD Price Forecast: Technical Outlook
On the 1 hour chart, EUR / USD remained subdued, unable to gain further traction to the downside. Also, the underperforming status of the EUR helps it reach a “safe haven” status, even though it is generally not one of them, like the JPY, CHF and the dollar. That put a brake on the move lower, near the 50 and 200 hourly simple moving averages (HSMA), which acted as dynamic support.
However, to resume the downside bias seen on a higher time frame like the daily chart, USD bulls would have to push the pair below the SMA.
In that result, the first support would be the S1 pivot point at 1.1238. A break below the latter would expose the November 26 low at 1.1204, followed by the S2 pivot point at 1.1158.
On the other hand, the daily center pivot at 1.1285 would be the first resistance. A gap above that level would expose crucial supply zones, such as the 1.1300 figure, followed by R1 resistance at 1.1365.
Additional technical levels