Sellers took the initiative against a negative external background
On Thursday, December 9, at the end of the day, the euro fell in price against the dollar by 0.54%, to $ 1.1278. The fall to 1.1310 was seen as a corrective move. Long positions hit stops below 1.1300. The euro came under pressure amid a series of negative factors:
1. The ECB is considering amending its PEPP reinvestment plans. The regulator may increase the reinvestment time under the emergency program.
2. A Japanese study found that the new COVID-19 variant is 4.2 times more infectious early on than Delta.
3. The UK has introduced new restrictions to curb Omicron contamination following a significant rise in the number of cases over the past few days.
4. Fitch downgraded the credit ratings of Evergrande and Kaisa to “limited default” because they were unable to make payments by the end of the grace period.
5. American indices fell and bonds rose as the economic threat of restrictions on control over the new version of Omicron outweighed optimism about the effectiveness of vaccines. The States started talking about a possible slowdown in US GDP.
6. The United States approved a bill on sanctions against violating the rights of Uyghurs in China.
7. The People's Bank of China has raised the ratio of reserve requirements in foreign currency.
Scheduled statistics (GMT +2):
At 11:30 in the UK there will be a report with data on consumer inflation for October.
At 15:30 the US is to publish the consumer price index for November.
At 17:00 US to publish consumer confidence index from the University of Michigan for December
At 17:00 USA Expectation on inflation from the University of Michigan December 4.9%
21:00 USA Budget Balance November -165.1 billion
Current situation:
In Asia, major currencies are trading in negative territory. The activity of speculators in the market is low, as everyone is waiting for the report with data on consumer prices in the US for November. This is the latest data ahead of the US Federal Reserve meeting. Inflation in the US, according to preliminary data, will rise to 6.8 percent. This could be a record high in 40 years.
Investors are cautious about risk as they are nervous about factors such as the uncertainty surrounding the new omicron strain and the possible consequences of the Fed's accelerated phase-out of the QE program.
Technical analysis:
The price is correcting below the balance line (sma55). After the breakdown of the trend line, sellers dominate. They are now targeting new levels of 1.1275 and 1.1248. Due to the negative external background, buyers went on the defensive. If inflation in the US turns out to be below the forecast, then the major currencies will receive support.
Summary:
The euro closed in the red on Thursday. The euro / dollar fell against the background of the deteriorating external background. Uncertainty over Omicron and technical defaults by Chinese developers have raised new concerns about lockdowns and a slowdown in global economic growth. Investors are showing a cautious attitude towards risk. Everyone is waiting for the November US consumer price data report. The last report before the meeting of the US Federal Reserve.