EUR/GBP RALLY AT RISK AS OMICRON FEARS RECEDE

somrat4030

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Forex Forum, Currency Trading Analysis and Forecast Nov-30, 2021​


EUR/USD Market Analysis

The strong rally in EUR/GBP that has lifted it from a low of 0.8380 on November 22 to its current level close to 0.85 is under threat, principally on evidence that the Omicron variant of Covid-19 is more contagious and dominant than previous variants but also less deadly.

It was news of Omicron that spooked the markets Friday and again this week, not helped by the chief executive of Moderna who was reported by the Financial Times as predicting that existing vaccines will be much less effective at tackling Omicron than earlier strains of Covid-19 and warning it would take months before pharmaceutical companies can manufacture new variant-specific jabs at scale. Click Here To learn more..

Moreover, EUR/USD gathers extra pace and surpasses the 1.1300 barrier on quite a convincing fashion on Tuesday.​


In case the recovery picks up further impulse, then the pair is forecast to test 1.1374 (November 18) ahead of the minor hurdle at the 20-day SMA at 1.1389.

The probability of further losses remains unchanged as long as EUR/USD trades below the 2-month resistance line (off September's peak) near 1.1560. In the longer run, the offered stance in spot is expected to persist while below the 200-day SMA at 1.1828.

On the other hand, The Pound fell against the Euro, Franc and Yen but held ground against the Dollar: the Dollar has not been displaying its usual 'safe haven' characteristics as these developments suggest the Federal Reserve will now have reason to slow its approach to raising interest rates.

The Pound did however advance against the 'high beta' currencies: the Australian Dollar, New Zealand Dollar, Canadian Dollar, Norwegian Krone and Emerging Market currencies.

Bancel said the high number of mutations on the Omicron's spike protein suggests the the current crop of vaccines may need to be modified next year.

Yesterday, EU reported that Euro Area Consumer Confidence declined from -4.8 in October to -6.8 in November, in line with the analyst consensus. Euro Area Industrial Sentiment decreased from 14.2 in October to 14.1 in November compared to analyst consensus of 13.9.

Interestingly, Euro Area Services Sentiment improved from 18 (revised from 18.2) in October to 18.4 in November while analysts expected that it would decline to 16.6. The strength of the Euro Area Services Sentiment is surprising given the recent developments on the coronavirus front.

US futures​


  • Dow futures -0.93% at 34794
  • S&P futures -0.77% at 4617
  • Nasdaq futures -0.46% at 16318

In Europe​

  • FTSE -0.7% at 7070
  • Dax -0.71% at 15181
  • Euro Stoxx -0.7% at 4080

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