EUR/USD Mid-Session Technical Analysis for December 30, 2021

The Euro is trading lower against the U.S. Dollar in holiday-thinned trading on Thursday, as investors remained cautiously optimistic about the economic consequences of a surge in cases of the Omicron coronavirus variant.

Reuters data shows global COVID-19 infections hit a record high over the past seven days but, comforted by data suggesting the virus may turn out to be milder than in previous waves, many governments have resisted imposing widespread new lockdowns.

At 13:09 GMT, the EUR/USD is trading 1.1331, down 0.0017 or -0.15%. On Wednesday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $105.48, up $0.30 or +0.28%.

Omicron Damage to Euro Zone Could Be Short-Lived

Looking at the potential hit the latest wave of infections could inflict to European economies, Berenberg economists said in a note that a slowdown in economic activity would likely be short-lived.

“A potential decline in GDP in early 2022 would likely be offset by a bounce in activity shortly thereafter, leaving the outlook for GDP in 2023 unchanged,” they wrote.

“We view Omicron as a risk to the time profile but not the overall pace of growth,” they stated.

US Economic News

On the data front, initial jobless claims are due out at 13:30 GMT while a December Chicago PMI will come out at 14:45 GMT.

Weekly Unemployment Claims are expected to come in at 205K, matching last week’s number. Chicago PMI expected to come in at 61.9, up slightly from the previously reported 61.8.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum is trending higher. A trade through 1.1383 will change the main trend to up. A move through 1.1186 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 1.1369 will indicate the buying is getting stronger. A move through 1.1274 will change the minor trend to down.

The minor range is 1.1274 to 1.1369. The EUR/USD is currently straddling its pivot at 1.1322.

The main support is the long-term Fibonacci level at 1.1291.

On the upside, the potential resistance is a pair of 50% levels at 1.1397 and 1.1439.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1322.

Bullish Scenario

A sustained move over 1.1322 will indicate the presence of buyers. The first upside target is yesterday’s high at 1.1369, followed by 1.1383 and 1.1397.

Bearish Scenario

A sustained move under 1.1322 will signal the presence of sellers. The first downside target is 1.1291, followed by 1.1274.

Since the main trend is down, taking out 1.1274 could trigger an acceleration to the downside with 1.1235 the next likely target.