The pair will likely keep rising as bulls target the 50% retracement level at 1.1440.
Buy the EUR/USD and add a take-profit at 1.1440 (50% retracement).
Set a stop-loss at 1.1200.
Timeline: 1-2 days.
Set a sell-stop at 1.1250 and a take-profit at 1.1180.
Add a stop-loss at 1.1380.
The EUR/USD pair rose slightly on Monday even as the number of Omicron variant cases keep rising and countries add travel restrictions. The pair rose to 1.1310, which is about 1% above the lowest level this month.
The biggest concern globally is the rising number of Omicron variant that started to spread last week. The number of cases continued rising during the weekend as more countries announced travel restrictions.
This happened as the World Health Organization (WHO) designated it as a “variant of concern”. It attributed this to the fact that it was able to reinfect patients and evade vaccines.
Subsequently, governments in the United States, European Union, UK, and South Korea announced travel restrictions for South African travellers. Still, there are concerns about how these restrictions will affect the global economy.
At the same time, there are calls for new lockdowns in several countries. Already, Austria has announced a national lockdown in a bid to manage the spread. Germany and the Netherlands are also considering new lockdowns.
The EUR/USD will today react to testimony by Federal Reserve chair. In it, he will likely address the new Omicron and its impact on potential Fed tightening. The US will publish the latest pending home sales numbers.
The other key movers for the pair will be the latest inflation numbers from European countries. Analysts expect the data to show that the German headline consumer price index (CPI) jumped from 4.5% to 5.0%. This will be the biggest increase in more than a decade. In Spain, the headline CPI is also expected to rise by 4.0%.
The pair will also react to the latest Eurozone services, industrial, business, and consumer confidence numbers from the Eurozone.
The EUR/USD pair has been in a major bearish trend in the past few months. This drop saw it move from a high of 1.1695 when the month started to 1.1182. The pair has bounced back in the past two days as the new variant has brought concerns. It has managed to move above the 23.6% Fibonacci retracement level.
At the same time, the 15-day and 25-day moving averages (MA) have made a bullish crossover. At the same time, the Relative Strength Index (RSI) has moved close to the overbought level. For now, the pair will likely keep rising as bulls target the 50% retracement level at 1.1440.