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Andreas Zanin
Analysis | December 7, 2021

KTM FX Weekly: Euro crosses are trading at interesting times

In the past two weeks euro trading on a stable note, mainly in a tight range. Dollar strength amid Fed‘s hawkish outlook is the key factor for the euro downfall. On top of this, the funding currency tag is another critical factor to the euro underperformance against the G10 currencies.

As we noted last week, we still expected the limited downside from the current level. Euro traders are focusing on the December 16th ECB meeting. The level to watch is at 1.1150 and 1.1000; it’s a 78.6 fib reaction.

On the dollar side, curve flattening is supporting the bids. After rallying to the highest level since September 2020, the dollar caught in a range between $97-$95.40. A decisive break down below 95.40 would drag the dollar 94.50.

Safe havens: 

The EURJPY cross fell seven straight weeks for the 1st time, as per the historical data available from 1999.

The other cross EURCHF fell for eleven straight weeks, the longest falling streak ever recorded.
The below chart suggests that around 1.022 is the next support we could lean on. Below here, parity and 2014 December lows exist.


As the Omicron fears ease, we expect the safe-haven currencies like CHF and JPY will underperform against the euro in the coming days. Technically oversold is the one hope to this view.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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