EUR / USD: A threat called Omicron, an affront called Manchin

(News Bulletin 247) – The Euro, as a reliable barometer of risk appetite in financial markets, remained squeezed in the face of the threat posed by the new Omicron variant. The Dollar for its part suffered the major political affront of the refusal of a Democratic Senator to vote on the social and environmental aspect of the Biden stimulus plan. Plan that forms the cornerstone of the entire mandate.

In the health chapter, if the first announcements on this subject were rather reassuring, the exceptional contagiousness of the new strain of the coronavirus still forced several European countries to impose new restrictions, and weighed down the morale of operators. “The lockdown announced in the Netherlands will heighten fears that similar measures will be adopted in other European countries in the coming weeks,” writes Lee Hardman, analyst at Mitsubishi UFJ Financial Group. Uncertainty now hangs over what other European countries very affected by Omicron could decide, including the United Kingdom and Italy. Denmark also announced new restrictions last week, in the form of tightened standards in restaurants and cafes.

“The holiday season could accentuate the phenomenon and force some countries to announce tough restrictions after the end of the year holidays,” warns analyst Vincent Boy (IG France). “In the United States, the situation is also getting worse, but a lockdown is unlikely to be announced.”

On the thorny American political component, a single Senator, (Democratic camp, West Virginia) Joe Manchin, blocks the vote for the BBB plan (Build Back Better), a plan of more than 1,700 billion dollars which includes major social and environmental aid and investments. It is “following this announcement” that “Goldman Sachs has decided to reduce its growth prospects for 2022 in the United States to 2% against 3% for Q1, 3% against 3.5% for Q2 and 2 , 75% against 3% for Q3. “, Noted Vincent Boy.

This no is “definitive”, announced Joe Manchin on television, it thus blocks the vote by itself, the Democrats not reaching the majority for this one. Indeed, 50 seats out of 100 are currently occupied by Republicans in the Senate. Counting the voice of Kamala Harris (Vice President of the United States and President of the Senate), the Democrats have 50 votes …

John Plassard (Investment Specialist at Mirabaud) recalls that the plan “includes funding for COVID-19 relief, social services, social assistance and infrastructure, in addition to funds allocated to reducing the effects of climate change. Many investors had bet heavily that this proposal could boost the US economy in 2022 despite new uncertainties related to the Omicron variant. “

Joe Manchin’s firm NO to Joe Biden BBB reform plan is an extremely important political setback. First of all it was indeed a strong campaign pledge from the current president. Democrats are divided over whether to use public funds in the face of abysmal US debt. it could also call into question the Fed’s monetary decisions in the face of declining growth, a resurgence of Covid cases and a potential stabilization of inflation. “, he sums up.

As a reminder, the “heavy infrastructure” part of the recovery plan, finally reduced to 1,200 billion dollars, was adopted in early November by the House of Representatives.

In all cases, it is clear that there has been confirmation of a halt in the growth of the Dollar against a basket of major representative currencies. The Dollar Index found a form of resistance in the 96s.

In the statistical chapter yesterday, very little to chew on. Note the leading indicators (BC) index in the United States, up slightly more than expected, to + 1.1%. The agenda will not really become denser until Wednesday across the Atlantic, with the consumer confidence index (CB), sales of second-hand homes, final Q3 GDP data and crude stocks.

On this side of the Atlantic, To be kept on the agenda this Tuesday, as a priority, the consumer confidence index in the Euro Zone at 4:00 p.m.

At midday on the forex market, the Euro was trading against 1,1290$ about.

KEY GRAPHIC ELEMENTS

For now, the Euro / Dollar currency pair is still in the course of a wedge consolidation wedge, which fits into a strongly bearish background momentum. The configuration remains heavy, but we warn against the temptation of an early return to bearish positions, the “risk” of a false top exit, in the very short term, being present. We are still waiting for a much better 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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