Euro is trading lower against the greenback as a reverse of Friday’s virus-led rebound during early European morning on Monday.
The rationale behind this move can be related to the upbeat comment of the US and covid fears in Eurozone. The new variant of covid – The omicron virus had not yet been detected in the US. National Institutes of Health (NIH) officials renewed hopes that the virus vaccines, as well as the booster doses, can help overcome the latest challenge to the global economy.
Additionally, Israeli Professor Dror Mevorach termed ‘Omicron’ as less severe than the ‘Delta’ version of the coronavirus. But on the other hand, Dr Anthony Fauci, the nation’s top infectious disease doctor and the president’s chief medical adviser, said “it was inevitable that the variant would appear in the US.” However, as of now, the Postive comments favors the greenback.
ECB latest comment on the new variant further weighs the Euro and favors the greenback. European Central Bank President Christine Lagarde said ” The euro zone is better equipped to face the economic impact of a new wave of COVID-19 infections or the Omicron variant.”
“There is an obvious concern about the economic recovery [of the euro zone] in 2022, but I believe we have learnt a lot. We now know our enemy and what measures to take. We are all better equipped to respond to a risk of a fifth wave or the Omicron variant”, Lagarde further added that “The crisis taught us this virus knows no boundaries. Therefore we will not be protected until we are all vaccinated”
Moreover, the central bank’s Executive Board member Fabio Panetta said over the weekend said that The European Central Bank (ECB) doesn’t need to intervene in order to tighten the monetary policy now, as inflation is driven by temporary factors.
The pair traders will now await for preliminary reading of the German Harmonized Index of Consumer Prices (HICP) for November, expected 5.4% YoY versus 4.6% prior, Speeches from European Central Bank (ECB) President Christine Lagarde, Federal Reserve Chairman Jerome Powell and US President Joe Biden which will be crucial to direct the pair further.
EUR/USD 4 Hour Chart:
Support: 1.1237 (S1), 1.1159 (S2), 1.1113 (S3).
Resistance: 1.1361 (R1), 1.1406 (R2), 1.1485 (R3).
As of now, the prevailing fears of economic recovery in the Eurozone weighs on Euro , we expect a bearish trend for EUR/USD.
