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What’s driving the transfer greater in EUR/USD?
A simplistic method to viewing main currencies is that when markets are risk-off, the primary beneficiaries are sometimes the yen, franc and greenback.
Nevertheless, in the previous couple of classes, the euro can also be a standout performer with the only forex even outpacing the greenback fairly markedly in a bounce from close to 1.1200 on Friday to 1.1350 ranges in the intervening time.
So, what precisely is inflicting the greenback to underperform towards the euro?
For one, there was a big bid within the greenback within the weeks earlier than this omicron saga hit and that comes on the again of stronger greenback technicals and fundamentals to some extent. For me, the latter is the place issues are taking part in again for the greenback towards the euro.
With the emergence of omicron dangers, that has thrown Fed price hikes pricing right into a little bit of a chaotic mess and with Treasury yields tumbling closely throughout the board as properly, that’s seeing the supposed coverage divergence commerce unwind.
From a technical perspective, EUR/USD could also be trying in direction of 1.1400 subsequent however there may be some minor resistance round 1.1373-74 simply earlier than that.
As a lot as omicron dangers are dominating buying and selling sentiment in the intervening time, I reckon if the market will get previous that, there could also be a great setup for shorts in EUR/USD.
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