Yesterday was the last day of autumn. So, it seems appropriate to give a review of the pair's monthly chart and sum up the achievement of the main currency pair in November. We will also analyze its further dynamics. But before that, let's touch upon the burning issue of COVID-19 and take a look at the economic calendar to see the key events that can affect the EUR/USD pair today.
As we have mentioned in our previous articles on EUR/USD, Europe is seriously concerned about the new coronavirus strain called Omicron which was detected in South African. First of all, a surge in the number of new infection cases and the introduction of tougher restrictions may negatively affect the recovery of the European economy that has bit hit by the coronavirus crisis. However, President of the European Central Bank (ECB) Christine Lagarde expressed confidence that Europe has sufficient experience in fighting COVID-19. Therefore, a new strain, as well as possible subsequent waves of the pandemic, are unlikely to affect the economic state of the region. She also called for mass vaccination of the European population. However, the chairman of the US Federal Reserve (Fed), Jerome Powell, is not so optimistic. The head of the Federal Reserve is worried about the emergence of a new virus strain. He believes that the next wave of the pandemic can significantly affect the pace of recovery of the world's leading economy. As I see it, Jerome Powell's assessment of the risks carried by Omicron is more adequate. For both the United States and Europe, it is important to avoid the introduction of a lockdown, which could create high risks for economic recovery. We will get more clarity on the situation in the near future.
If we look at today's economic calendar, Germany has already published the data on retail sales (both seasonally adjusted and non-seasonally adjusted). Both indicators were in the red zone, that is, weaker than expected. Most probably, the supply disruptions and high inflation have negatively affected Germany's economic indicators. As for the United States, the data on the ADP nonfarm employment change will be published today at. US Treasury Secretary Janet Yellen is expected to speak at 18:00 Moscow time. The ISM manufacturing index will be released at the same time. Later at 22:00 Moscow time, the Fed's Beige Book will be presented to investors.
Monthly chart
Although the main currency pair finished last month with a steep decline, I wouldn't be so sure about its further price direction. The lower shadow of the November candlestick, which is rather long, raises doubts about the continuation of the downtrend. Besides, the price closed this month above the important technical level of 1.1300, while the lows were seen at 1.1187. The bears managed to break through the boundaries of the Ichimoku cloud indicator, as well as the blue Kijun line. So, when analyzing the highest time frame, it is not possible to make a clear conclusion about the further direction of the pair. EUR/USD is likely to decline to the key support of 1.1200 and then rise towards 1.1500.
H1 chart
Today, the pair has almost completely recovered after yesterday's strong fall. The price found good support near the level of 1.1236 where the quotes began to rise. However, at the moment the article was completed, the euro bulls faced a strong obstacle when approaching the historical level of 1.1360. A breakout of this level will allow the pair to retest the bearish resistance at 1.1385. If this level is broken and the next three candlesticks close higher, it would be possible to buy on the pullback. At the same time, the key level of 1.1400 is located too close and poses some risks. I recommend buying the pair after a short-term decline to the 1.1315-1.1300 zone. This zone is rather strong from the technical viewpoint. Besides, all three moving averages, 50-MA, 89-EMA, and 200-EMA, are also located here. Selling the pair will become possible as soon as reversal bearish pattern (or patterns) of candlestick analysis appears in the area of 1.1360-1.1385. Try selling with the nearest targets at 1.1320. That's all for now.
Good luck!
