(News Bulletin 247) – The Euro remained compressed below its 20-day moving average (in dark blue) against the Dollar, while very significant volatility continued to dominate the equity and commodity markets, the markets, hypersensitive, tempting to measure at this stage the potential impacts of the appearance of a new variant of the coronavirus on the economic recovery and on the monetary normalization process of the Fed and the ECB.
“The high rate of hospitalization among children and its high transmissibility suggests that the Omicron variant may be able to withstand current vaccines, which is worrying to say the least. We are awaiting further clinical data, which will be essential for determine the extent of possible new confinements “, analyzes César Perez Ruiz, Head of Investments and CIO at Pictet Wealth Management.
In any case, the discovery of the Omicron variant of Covid 19 is […] the warning that at least as much as inflation, the virus remains a determinant of the markets which must be approached not as a hypothesis, but as a certainty with an unknown temporality “, summarizes Alexandre Hezez, strategist for the Richelieu Group.
In this context, the Fed will have to deal with a new unknown in the equation, and this in the context of inflation that is no longer transitory. On Friday, the various consumer price indices in the United States will shed additional light and fuel reflection on the pace of the monetary tap tightening.
In terms of statistics, the dynamics of industrial orders in Germany for October completely missed expectations, falling by almost 7% month on month. In addition, the Sentix index of investor confidence in the Eurozone came out sharply down to 13.5, below expectations.
In the immediate term, it is the “ZEW” (index of confidence in the German economy by the Zentrum fur Europaische Wirtschaftsforschung) which allows the single currency to keep its head above water. The indicator emerges in the immediate vicinity of the 30 points, in very slight contraction compared to the consensus, and thus largely beating the target.
ZEW Chairman Professor Achim Wambach however made the following cautious comments: “The German economy is suffering significantly from the latest developments in the COVID-19 pandemic. Persistent bottlenecks weigh on production and retailing. Falling economic expectations show that hopes for much stronger growth over the next six months are fading. In particular, earnings expectations of export-oriented and consumer-related industries are assessed more negatively ”.
The last figures of the German trade balance followed at 2:30 p.m.
At midday on the forex market, the Euro was trading against 1,1270$.
KEY GRAPHIC ELEMENTS
The short current was strongly reinforced by the break of a technical zone at 1.1530, on marubozu on November 10th. 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 neutral opinion 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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Source: Tradingsat
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