The EURUSD pair advanced 0.36% to 1.1278 on Monday, December 21. The single currency drew support from EURGBP gains after a state of emergency was declared in London due to a surge in Omicron cases. During the North American session, the uptrend reached 1.1304 amid overall recovery in US stock indices and a weakening dollar.

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Today’s macro agenda (GMT+3)

• 14:00 UK: CBI distributive trades (December)
• 16:30 Canada: retail sales (October)
• 16:30 US: current account (Q3)
• 18:00 Eurozone: consumer confidence flash (December)
• 18:30 Australia: leading index (October)

Current outlook

Major currencies have swung between gains and losses on Tuesday, with heightened demand for risk assets since the APAC session. Conversely, the yen and the franc are stuck in the red. In our view, this looks more like a correction, as investors continue to fret about a delay of the economic recovery. The gold price declined but held steady as many traders view the precious metal as an inflationary hedge. Gold is not expected to go down in Q1 2022.

Uk PM Boris Johnson on Monday said he will reserve the possibility of tougher action to curb the spread of the Omicron coronavirus variant.

Technical analysis

EURUSD recovered to 1.1303. Price action halted at the 55-day SMA (balance line). The euro drew support from an uptrend trend in euro cross pairs amid weakness in sterling.

The recent wave of negativity has theoretically been enough to drag the euro down to 1.10. Meanwhile, constant upward swings from 1.1220 keep making sellers jittery. Price action has been locked in the range of 1.1220-1.1385 for 20 calendar days. This range will most likely be breached by New Year’s as volumes grind to a halt. We  expect the key pair to decline to 1.1250-1.1260 with a subsequent let up to 1.1315.