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  • EUR/USD recovers from losses in the early Asian session.
  • French Prime Minister Macron held an emergency meeting on Monday to address many Covid cases.
  • Vice President Harris remains hopeful that the index will rise above the BBB and show a willingness to fight inflation.

During the early morning hours of Monday in Europe, the EUR/USD price traded above 1.1325. During the sluggish holiday season, the US Dollar (DXY) Index is tracking low Treasury yields, which has led to a three-day gain for the major currencies.

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A day after hitting a two-week high, the 10-year US Treasury yield fell 1.1 basis points to 1.482%, as the US dollar index fell 0.08% to hit 96.10.

Market optimism may be related to President Joe Biden’s Build Back Better (BBB) stimulus plan, backed by comments from US Vice President Kamala Harris, and hopes that the economic transition will be the result of Africa’s COVID-19 variant does not stop, namely Omicron. This could be attributed to an 8.5% rise in US retail sales during this year’s holiday shopping season, from November 1 to December 24.

It is noteworthy that previous studies that showed fewer Omicron hospitalizations and positive shifts in treating COVID-19 also influenced US Treasury yields and favored EUR/USD prices.

Nevertheless, the surge in Covid infections in France, which reported a record number of daily infections over the weekend and doubled the number of hospitalizations last month, has been challenging for EUR/USD buyers. According to Reuters, the average number of new Coronavirus cases in the US increased 45% to 179,000 a day in the past week. According to Reuters, multiple travel bans and 4,500 flight cancellations have been attributed to the worsening virus situation during the holiday season.

Geopolitical tensions between Russia and the West, primarily Europe, are affecting gas supplies to Europe, as reported by Reuters. They cited German network operator Gascade as saying that fuel is returning to Poland for the sixth day in a row in the meantime.

Particularly, markets thinned over the holidays seem to care little about risk-taking in the absence of critical data/events, allowing EUR/USD to consolidate year-over-year losses.

We may receive further clues regarding the EUR/USD pair from the comments of French President Emmanuel Macron and the Dallas Fed Manufacturing Index for December, which is expected at 13.2 versus 11.8 earlier. The battle between the ECB and Fed could keep EUR/USD under pressure if there are no surprises, which is unlikely until the end of 2021.

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EUR/USD price technical analysis: Consolidating in a triangle

eur/usd price

The EUR/USD price is consolidating in a narrowing ascending triangle. We can expect a breakout of the triangle. However, the low volatility keeps the pair in a very tight range. The 20-period and 50-period SMAs continue to lend support to the pair. The EUR/USD price is expected to wobble within 1.1280 to 1.1330.

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