Daily Market Recap – EURUSD Euro continues its consolidation

The markets are disturbed by the advance of the Omicron variant in Europe and by a blow to the gigantic social reform plan of the American president Joe Biden.

A few days before the end of the year holidays, several countries have put in place new restrictions to try to stop the spread of the Omicron variant.

Following the decision of US Democratic Senator Joe Manchin to reject Joe Biden's social and ecological reform program, Goldman Sachs has revised downwards the US growth forecasts for next year.

The European Central Bank has lagged far behind the Bank of England and the Fed in the monetary tightening cycle. By announcing that it would end its emergency bond purchases, but that it would continue its other purchases and keep rates close to zero until 2023.

The ECB was less determined to turn the page on its support for the economy: it announced a reduction in its asset purchases but promised to continue to support the recovery in 2022.

In terms of indicators, this week's reports on the gross domestic product, consumer confidence, and existing home sales will be released on Wednesday, while reports on personal income and spending, initial jobless claims, and new home sales are due on Thursday.

Despite a bearish momentum since June 2020, the EURUSD is stabilizing over the month of December. This stabilization phase appears to be within a chartist pattern: a symmetrical triangle.

Thus, the break of one of the two bounds should set the tempo for the rest. A breach of the upper boundary around $1.1370 would open the door to a bullish recovery to seek the oblique near $1.1460.

 (Chart Source: Tradingview 21.12.2021)

On the other hand, a breakout from the bottom of the triangle would lead to a continuation of the bearish momentum. The pair would come back to test the support at $1.1180 and if it breaks, the market should accelerate its decline to finish its run towards $1.1075.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.