EUR / USD: Does Omicron Question Monetary Normalization?

(News Bulletin 247) – The technical rebound of the Euro against the Dollar, fueled on Friday by the violent ebb in crude prices, is already seeing its momentum weakening, the appetite for risk in the trading rooms being in the short term. death, since the World Health Organization (WHO) has deemed “worrying” the new variant of the coronavirus to Covid-19, baptizing it with the Greek letter Omicron. Scientists still know little about this variant, which has not prevented an epidermal reaction on the active ingredients on the most sensitive assets (action, raw).

On the foreign exchange market alone, in any case, this health announcement is likely to allow “to see the probabilities of a Fed rate hike to be reduced for May and June, shifting the possibility of seeing such a hike a little more. in the short term. “, for Vincent Boy (IG France). So likely to calm the ardor of the Dollar against the Euro.

What to expect now? In the coming weeks, “crucial” for J. Plassard (Mirabaud), it is necessary to follow the advantage taken if necessary by Omicron over Delta, the variation in the incidence rate in the most affected countries, the cases of hospitalization. and death. To the question of a potential questioning of monetary policy, John Plassard answers clearly: “The answer is clearly yes. It is difficult to see how the American central bank could accelerate its tapering and raise its interest rates to 3 times in 2022 (as Goldman Sachs now thinks) if the new Omicron variant were to cause several countries to close their borders and partially shut down their economies. ”

If this Monday is relatively poor in statistical indicators, the week which opens is not. Forex traders will monitor in particular US consumer confidence (Conference Board) on Tuesday, PMI activity indicators in Europe on Wednesday, and the US monthly employment report (NFP) on Friday.

At midday on the forex market, the Euro was trading against 1,1285$ about.

KEY GRAPHIC ELEMENTS

The seller’s current was strongly reinforced by the break of a technical zone at 1.1530, on marubozu November 10. This is a major fact, which resulted in a massive release of selling energy. The short term is aligned with the medium term, bearish, on the Euro / Dollar currency pair, but the entry point is no longer optimal, as the probabilities of the formation of a protest rebound increase at this stage. Traders will temporarily prefer to stay out of the spot while waiting for a suitable entry point.

MEDIUM-TERM FORECAST

In view of the key graphical factors that we have mentioned, our opinion is neutral in the medium term on the pair Euro Dollar (EURUSD).

We will keep this opinion neutral as long as the price of the pair Euro Dollar (EURUSD) is positioned between the support at 1.1150 USD and the resistance at 1.1360 USD.

DAILY DATA CHART

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