Current price EUR / USD: 1.2248
- A new, more contagious strain of covid spurred risk aversion during the weekly opening.
- U.S. senators have agreed on a historic $ 900 billion coronavirus relief plan.
- EUR / USD rebounded above 1.2200, risk is skewed upward.
The week began in safe mode amid concerns over a new strain of coronavirus that has exploded in the UK, which has led to an emergency meeting of EU authorities. The greenback rebounded throughout the first half of the day as negative risk sentiment cooled around the Wall Street opening. The new strain of covid appears to be much more contagious, although reports so far indicate that it is no longer fatal. Additionally, the European Medicines Agency said there was no evidence that newly developed vaccines would not work with the new variant.
Meanwhile, U.S. senators have agreed on a historic $ 900 billion coronavirus relief plan and will vote on a bill on Monday, alongside government funding for an entire year. The news was overshadowed by panic. On the data front, the United States released the Chicago Fed’s national activity index in November, which stood at 0.27 from 1.01 the month before. The EU released a preliminary estimate of consumer confidence for December, which improved to -13.0 from -17.6 the month before.
On Tuesday, Germany will present the January GFK survey on consumer confidence, forecast at -9.5. The United States will release the final reading of Q3 GDP, November existing home sales and the Richmond Fed manufacturing index in December.
Short-term technical outlook EUR / USD
EUR / USD fell to 1.2129 but then moved back to the current price area of 1.2250. The near-term picture indicates that sellers’ interest is not yet strong enough to reverse the uptrend. In the 4-hour chart, the pair is expected to recover above a bullish 20 SMA after rebounding from an also bullish 100 SMA earlier in the day. Technical indicators rebounded from intraday lows but lost directional momentum around their midlines. The pair looks set to extend its lead, especially if it breaks above 1.2275, the immediate resistance zone.
Support levels: 1.2220 1.2170 1.2120
Resistance levels: 1.2275 1.2330 1.2385
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