Two Trades To Watch: EUR/USD, Dow Jones - Monday, Nov. 29

EUR/USD pares Friday’s gains, German CPI, Fed Powell in focus. Dow Jones rises after worst daily performance in over a year.

EUR/USD pares Friday’s gains, German CPI Fed Powell

EUR/USD is heading lower, paring gains from Friday when the pair recorded its biggest daily gain in 2021.

The discovery of the new Omicron COVID variant unleashed turmoil in the markets on Friday. The USD tumbled as investors questioned the Fed’s ability to hike rates quickly. However, comments from US & Israeli health officials over the weekend have served to calm market fears.

Eurozone consumer confidence is due to be released and show a decline in sentiment to -6.8 in November.

German inflation is also due to show a rise in CPI to 5% up from 4.6% in October.

Speeches from ECB’s Lagard and Fed Chair Powell could drive movement in EUR/USD, in addition to Omicron headlines.

Where next for EUR/USD?

Despite Friday’s 1% jump higher, the dominant trend for EURUSD is still bearish. EURUSD trades within its 6-month falling channel, the RSI is supportive of further downside whilst it remains out of oversold territory.

Immediate support can be seen at 1.1230 the lower band of the falling channel after which the yearly low of 1.1186 comes into play.

Any meaningful recovery would need to retake 1.1377 November 19 high in order to look towards 1.1460 November 15 high (FXE).

EURUSD chart

Dow rises after Friday’s selloff, Fed Powell

The Dow futures are moving higher after Friday’s bloodbath following the discovery of the highly mutated COVID variant, the Omicron.

The Dow saw its biggest one day sell off in over a year as investors fretted that the new strain of COVID could derail the economic recovery. Risk assets plunged and safe havens surged.

Today the mood is improving as a doctor who has treated cases of Omicron said that symptoms have so far been mild.

COVID headlines and a speech by Fed Chair Powell could drive movements in the Dow.

Where next for the Dow?

The Dow’s selloff on Friday saw it drop through the 50 sma before it found support at 34690. The rebound has retaken 35085 and is approaching the 50 sma at 35315. The RSI is pointing higher although remains in bearish territory.

Any meaningful recover needs to retake the 50 sma to bring the August high into play of 35620 into play.

Rejection at the 50 sma and a move bellow 34690 could see sellers gain traction towards the 200 sma at 34440 opening the door to 34095 the October swing low and 33530 the September low (DIA).

Dow chart

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