German inflation in Spotlight!
Yesterday and according to the US Department of Labor data, claims for unemployment benefits in the US fell to 185K in the week ended December 3, to push the Euro under 1.13 against the US dollar.
After short-lived optimist about Omicron variant of corona-virus, fast-spreading of virus leading countries one after another to have more restricted decisions. The UK as a first country already announced its new restrictions and now with the higher number of infections in the US, eyes can turn there. Therefore, the greenback could get the investors’ attention with increasing risks, as concerns about the Omicron variant of coronavirus persist. Even if we have more encouraging signs regarding Omicron, however, WHO’s Maria Van Kerkhove warned that they gave only “anecdotal information” about it.
While increasing market risk with great employment data from the US increasing the chance of having more hawkish policies from US FED, Reuters reported that European Central Bank's management thinking of temporary increase of Asset Purchases Program (APP) in the December meeting. This also makes the scales heavier in favor of the dollar.
On the data front also we do not have many signs to help the Euro. The latest published data from Germany's trade balance at €12.5 billion, missing expectations, and today, the biggest Eurozone economy is supposed to publish its inflation numbers. If numbers can not increase much higher than 5.2% expectations and see the inflation around the same level, again we can have more pressure on Euro, since it will help the ECB to follow its short-term plan to increase the asset purchases level.
Later in the North American season, and having the Jobless Claims at the lowest level since 1969, the market will focus on US inflation data. The market expects that the US CPI in November will increase by 6.8% annually, (October it was 6.2%, the fastest increase since 1990). In terms of monthly rates, the market expects CPI and core CPI to increase by 0.7% and 0.5%, respectively. Slightly slower than the previous month at 0.9% and 0.6%.
The technical outlook also is almost the same. Trading under 1.13 key level, increases the risk of a bearish extension to live longer. At the daily chart, price moves exactly on 20 EMA, as the RSI remains supportive for bears at 43, while the OBV trend line also slightly decreasing. Having the same trend there and decline towards 1.1185 can put the 1.1265, in the spotlight. Next supports site at 1.1292, 1.1266, and 1.1250. On the flip side, breathing above second resistance at 1.1333 can change the scenario in the short term.
