The EURUSD pair dipped 0.17% to 1.1267 on Tuesday, December 7. The euro was the worst performer among major currencies, while the aussie and the loonie posted the top intraday gains. The key pair dropped to 1.1227. And while it remains unknown what may have swayed cross-currency sentiment, the euro came under pressure across the board.
Data out of the EU might have been a trigger for the dollar's weakening. 3Q EU GDP came in at 2.2% QoQ. On the other hand, ZEW prints showed that economic sentiment in Germany and the EU improved in December, although the current conditions gauge in Germany fell to -7.4 compared to the median forecast of 5. This number took the market by surprise.
The Australian, New Zealand and Canadian dollars rallied amid optimism that the Omicron variant is likely less deadline than the dominant Delta strain and will not disrupt the economic recovery. By the close, the euro rebounded to 1.1268, and reached 1.1292 in Wednesday morning trading.
Today’s macro agenda (GMT+3)
Major currencies have been trading in positive territory against the US dollar, except for the Canadian dollar. Over the past two days, the loonie has firmed 220 pips to 1.2362. A corrective phase is apparently under way, as the currency has been strengthening without any pullbacks. The correction will last until the BoC’s interest rate announcement. The central cank is widely expected to keep its monetary policy stance on hold.
The economic calendar will be virtually a blank slate until Friday, when CPI reports come out of Germany and the US. Given that there has been no negative news about Omicron, the dollar could remain under pressure until the FOMC meeting (December 14-15).
Price action still remains stuck in the November 30 price range. Buyers managed to pare yesterday's losses due to rapid recovery of the EURGBP pair. In the cross-pair, the closest resistance level is 0.8530. Unless there is a shift in speculative sentiment towards the single currency, the door is open for EURUSD to reach 1.1320.
On the weekly TF, an upward reversal pattern has formed as part of a correction with a target in the vicinity of 1.1465. Yesterday's pinbar closed with a bearish body and a long shadow at 76.4% of the leg up from 1.1186 to 1.1383. Buyers’ rebound showed that they are ready to defend the 1.1235 level in the run-up to the FOMC meeting.
Today, support is located at 1.1265, which was yesterday’s support level. EURUSD has been in a local downtrend for five days. If sellers breach it again, we can expect the 1.1228-1.1235 zone to be retested.