On the final day of 2021, the major pairs are stuck in tight ranges. The euro is trading quietly at 1.1310 in the European session.
This holiday week was characterized by a dearth of economic releases and illiquid markets. That left the markets vulnerable to volatility due to market-movement headlines, but in the end, the currency markets had a generally quiet week.
The Omicron wave has caused a massive rise in infections, with the US setting an all-time daily record earlier this week. Still, the markets have been calm and collected about Omicron, relying on reports that show that the newest Covid variant is extremely contagious but causes less severe illness than previous Covid variants which caused tremendous economic damage. On Thursday, US chief medical advisor said that we could see a peak in the US in late January. This means that Omicron isn’t going away anytime soon, and the infection numbers will continue to be sky-high into the new year. The critical question for the markets is how sick are those people who are infected with Omicron – if we don’t see a huge spike in hospitalisations, then market sentiment should not be weighed down by Omicron.
The markets haven’t let Omicron ruin the positive mood, with the S&P 500 and Dow Jones posting record highs and a movement in the currency markets away from the safe-haven dollar. This upbeat mood was reinforced this week by a larger than expected decline in US crude oil inventories and an unemployment claims release of 198 thousand, which was better than expected. This suggests that the US economy continues to perform well, even with the explosion in Omicron cases.
EUR/USD Technical
- EUR/USD has support at 1.1255. Below, there is support at 1.1190
- There is resistance at 1.1364 and 1.1408
