Technical Analysis

EUR/USD Analysis – December 06, 2021

By LonghornFX Technical Analysis
Dec 6, 20214 min

Daily Price Outlook

The EUR/USD coin extended its previous session's bearish bias and stayed pressured around the intraday low of 1.1288, down 0.17% on the day. The recent weakness of the pair may be linked to remarks made by European Central Bank (ECB) President Christine Lagarde. The ECB President refers to recent inflation concerns as a "hump" and expands the possibility of maintaining cheap money policies.

In the meantime, broad-based US dollar strength was another key factor that kept the EUR/USD pair under pressure. However, the US dollar was supported by the market's risk-off mood, which boosted safe-haven demand and contributed to the EUR/USD currency pair's losses. Aside from this, the US dollar's safe-haven demand is bolstered by substantially weaker COVID circumstances in the bloc than in the US, as well as Sino-American tensions.

Concerns that China's faltering real-estate business, Evergande, would fail as the 30-day grace period expires on Monday also weigh on the EUR/USD prices. The EUR/USD currency is currently trading at 1.1286 and consolidating in the range between 1.1281 and 1.1314. During early Monday's Asian session, risk sentiment improved, supporting US Treasury yields and stock futures to offset Friday's losses. The market mood was being supported by hopes of discovering a cure for the South African COVID strain known as Omicron and speculation that the disease is less severe than previously thought.

Following its initial impact on Europe and the United Kingdom, the virus strain now has a firm grip on key global nations such as the United States and China. But, on the other hand, global scientists are confident of discovering a cure for the COVID-19 strain. The US's top medical officer, Anthony Fauci, recently approved Pfizer's medicine as effective against Omicron, while news of chewing gum to stop the virus' spread and the UK's campaign for treatment also gives traders hope. These positive headlines may help the EUR/USD currency pair limit its deeper losses.

As a result, S&P 500 futures were up 0.45% intraday, while US 10-year Treasury yields were up 4.2 basis points (bps) to 1.378 percent. It's worth mentioning that Wall Street indexes ended the day in the red while US 10-year Treasury rates fell approximately ten basis points (bps) to 1.35 percent, their lowest level since late September the day before.

On the USD front, the broad-based US dollar was supported by concerns about the omicron COVID-19 variation and forecasts of more hot US inflation data, which put upward pressure on interest rates. The mixed job report released on Friday only bolstered the case for a faster Fed asset withdrawal. The consumer price index, released later this week, is also expected to support the view and bolster the dollar. Thus, the US dollar's bullish bias keeps the EUR/USD pair lower. The US Dollar Index, which tracks the greenback against a bucket of other currencies, rose by 0.16% to 96.270.

Moving on, EUR/USD traders will be interested in Germany's Factory Order data for November, which is predicted to fall by 0.5 percent from the previous month's +1.3 percent. However, ahead of Friday's US Consumer Price Index (CPI), which will be essential for next week's Fed move, much focus will be on central bank comments and virus updates.

EUR/USD Intraday Technical Levels

Support Resistance

1.1272 1.1339

1.1236 1.1369

1.1205 1.1406

Pivot Point: 1.1302

EUR/USD - Technical Outlook

On Monday, the EUR/USD continues trading bearish, having dropped below the pivot point support level of 1.1302 level. The closing of candles below this level supports selling bias in the market. On the bearish side, a breakout of 1.1272 levels exposes the EUR/USD pair towards 1.1255 or 1.1175 levels. Further on the lower side, the next support prevails at 1.1155. Conversely, the resistance stays at 1.1302, and above this, 1.1333 and 1.1370 will be acting as a resistance, for now, all the best!


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