EUR/USD Supported Over the 50 EMA – US GDP in Focus!
Arslan Butt • 2 min read
The EUR/USD pair closed at 1.22434, after placing a high of 1.22528, and a low of 1.21293. On Monday, the EUR/USD currency pair fell to its lowest level in three days in the early trading hours, due to the strength of the US dollar. However, in the late trading hours, the EUR/USD managed to recover its daily losses, closing its day with gains.
The US dollar was strong onboard on Monday, as the demand for safe-haven currencies increased with the rising fears of a new mutant variation of the coronavirus in the UK. Britain’s top Health Secretary, Matt Hancock, warned that the new coronavirus variant was highly transmissible and was out of control. In response, the World Health organization also urged the UK government to increase measures to contain the virus, while suggesting that European countries should adopt measures to prevent it from spreading further. Given the warning, about 40 nations banned arrivals from the UK to stop the new variant of the coronavirus from spreading.
This new fear added to the safe-haven appeal and supported the safe-haven greenback, ultimately weighing on the EUR/USD pair and causing it to fall below the 1.2200 level on Monday. Meanwhile, the outlook for the Eurozone was also affected by the latest lockdown in the largest European economy, Germany. The country reported a record level of coronavirus deaths, as it entered into a hard lockdown on Wednesday. Schools and shops were closed, in an attempt to bring down the rising numbers if daily infections, which has increased to record highs. These factors also added to the downward momentum of the EUR/USD pair on Monday.
However, the losses in the EUR/USD pair didn’t last long, as they reversed initially, before recovering in the late trading session on the same day, for a variety of reasons, including good macroeconomic data from Europe, the agreement between Congressional leaders over the next round of US stimulus measures and the rising risk sentiment in the market.On the data front, at 19:39 GMT, the Consumer Confidence from the Eurozone for December came in at -14, against the expected -18, which boosted the single currency Euro, adding gains to the EUR/USD pair on Monday.
Meanwhile, on Sunday, the Democrats and Republicans reached an agreement on a $ 900 billion stimulus relief package, which was signed by US President Donald Trump.US Treasury Secretary Steven Mnuchin said that American people would start receiving paychecks in their bank accounts as early as a week. These developments regarding the US stimulus package weighed heavily on the US dollar, adding strength to the EUR/USD pair, resulting in the recovery of all of its early daily losses.
Pivot Point: 1.2206
The EUR/USD bounced off from the support level of 1.2125, and now it is holding below a double top resistance level of 1.2215. Closing of candles below these double top levels could extend the selling trend until the support area of 1.2213. Below 1.2213, we may see the EUR/USD pair falling until the 1.2185 level. Let’s consider staying bullish above 1.2206 and bearish below the same level today. Good luck!
About the author
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.