EUR/USD has gained 0.22% since the trading day. The pair is trading at a tight range between 1.1280 and 1.1350.
- The Omicron worries loom over the EUR as the cases arise.
- Both Federal Reserve and the European Central Bank will state their monetary policies this week.
- USD strengthens as investors find a safe haven.
EUR/USD fundamental forecast
The EUR/USD swiftly shakes some of Monday lows, starts its path towards the north, and is now trading above 1.1300.
USD strengthens
On Monday, the euro’s fall was caused by a higher dollar rather than any specific euro softness.
The USD approached a one-week high as expectations grew that the Feds might tighten the monetary policy earlier than expected to manage persistently rising inflation.
Climbing Omicron cases in Europe
According to the ECDPC, there have already been over 6000 confirmed cases of the variant reported in 70 countries since its detection at the end of November. Amidst this uncertainty, the German FTSE100 fell 0.73 % to 654.
The Feds vs. ECB
The Fed just modified its position on inflation, and most probably, ECB will try to come up with a similar position. Inflation is at a record level in all of the European continent, with soaring prices making at 4.9%, well above the target the ECB’s target of 2%.
In contrast to the US, Europe’s economic recovery is taking a toll, and it is now dealing with the new Omicron variant. At this point, the ECB anticipates that inflation can fall to 5% in 2023 and will announce its projection for the coming year this week.
Key releases from EUR
On the calendar front, the important decisions of the week are ECB’s monetary policy meeting and German Flash Manufacturing PMI.
Key releases from the US
Across the pond, on December 15, we have a monetary policy meeting where Fed. Chairman Jerome Powell will speak.
What to look ahead to?
Traders are ready for the Fed to dismantle stimulus quickly and announce an interest-rate rise in 2022, both of which might cause economic problems.
The Federal Reserve’s policy statement tomorrow is one of 20 central bank meetings scheduled for this week, which may trigger market volatility.
Looking ahead, the divergent trajectories of the ECB and FOMC may maintain EUR/USD in a downward trend as it trades to new annual lows in the second half of 2021.
EUR/USD technical analysis: bears to pounce 1.1300
EUR/USD gained 0.24% during the day and is now trading at 1.1313. The pair is below the 100-day MA on the daily chart, but the MACD is pointing upwards. This suggests a short-term bullish momentum.
The pair is now seeking to maintain its position above 1.1310. This point is a pivot point for the pair. If the pair goes below this level, it can go towards the next support at 1.1260; it’s yesterday’s low.
On the upside, the pair’s resistance is at 1.1354. If the pair can break above this level, the next resistance lies at 1.1383, the level it reached on November 30.
