The EUR/USD pair closed at 1.21619, after placing a high of 1.22569, and a low of 1.21521. The EUR/USD currency pair dropped on Tuesday, posting losses amid the rebound in the US dollar and the fears of the spread of a new variant of the coronavirus. The US dollar was strong among the major currencieson Tuesday, as the US Dollar Index surpassed the 90.50 level on the day, providing support for the greenback. The US dollar rose due to the demand for safe-havens, on the back of rising fears of the spread of a new variant of the coronavirus.

A new strain of COVID-19 is sweeping across southern England and has caused alarm in continental Europe, rsulting in the EU countries implementing travel bans on the UK, in an effort to stop the mutation from spreading locally.

Over the weekend, PM Boris Johnson warned that the fast-spreading new variant of the coronavirus was 70% more transmissible than the original virus, stating that it was probably the main driver in the rising number of infections in London and southern England.However, health officials in Great Britain also said that they had found no evidence that the new variant was more deadly than the original, or that it would be immune to the vaccines – in other words, there is no proof that the existing vaccines will be any less effective against the new variant. All that is known, thus far, is that the new variant spreads faster than the original.

Meanwhile, on Monday, the European Centre for Disease Prevention and Control (ECDC) said that timely efforts were necessary to prevent and contain the spread of the new COVID-19 strain. The agency also said that a few cases of a new variant had also been detected in Iceland, Denmark, Belgium, Italy and the Netherlands. The news that the new variant has reached the European nations raised fears of it spreading further, which weighed on the local currency, the Euro, ultimately adding to the losses in the EUR/USD pair on Tuesday.

On the other hand, the US dollar was also strong because of the robust macroeconomic data on Tuesday. At 18:30 GMT, the Final Gross Domestic Product for the third quarter surged to 33.4%, against the anticipated 33.1%, supporting the US dollar and ultimately putting pressure on the EUR/USD prices. At 18:32 GMT, the final quarter GDP Price Index was released, coming in line with the projections of 3.5%. At 19:59GMT, the Richmond Manufacturing Index for December for the US also surged, coming in at 19, against the estimated 11, boosting the greenback and adding further to the losses in the EUR/USD

At 20:00 GMT, the CB Consumer Confidence for December declined to 88.6, against the anticipated 97.1, which put pressure on the US dollar. The Existing Home Sales for November came in line with the projections of 6.70M. From the European side, at 12:00 GMT, the German GfK Consumer Climate for December came in at -7.3, against the anticipated -8.7, supporting the single currency Euro and capping any further losses in the EUR/USD pair on Tuesday.

Furthermore, the losses in the EUR/USD pair could also be attributed to the rising demand for safe-havens and the decreasing demand for risk sentiment after the reports suggesting that the coronavirus had reached the seventh continent of the world. Chile’s military reported that the coronavirus had landed in Antarctica, which was previously free of the virus, making it the last continent to be hit by COVID-19. Chile’s armed forces said that about 36 people had been infected, including 26 members of the army and ten civilians. The EUR/USD pair, which is preceived as risky, came under pressure after this news, and continued moving in a downward direction on Tuesday.

Daily Technical Levels:
Support               Resistance
1.2123                  1.2229
1.2084                 1.2296
1.2017                  1.2334
Pivot Point:        1.2190

The EUR/USD bounced off over the 1.2150 level, the support area which is extended by an upward trendline. On the higher side, the pair may find resistance in the 1.2230 and 1.2269 range. However, a bearish breakout at the 1.2152 level could extend the selling trend until the 1.2103 mark. The market is dominated by a neutral bias. Good luck!