Euro-Outlook-EURUSD-EURGBP-Key-Levels-Omicron-Fears-Rise

EUR/USD, EUR/GBP Talking Points:

• EUR/USD edges higher despite a shift in risk sentiment
• EUR/GBP battles it out at critical resistance
• Can the Euro maintain resilience despite global lockdowns?

Will New Covid Restrictions Weigh on the Euro?

A surge in the number of Covid-19 cases has placed governments under additional pressure as the Omicron variant continues to spread at a rapid pace. With policy makers now implementing restrictions in an effort to reduce the number of infections, the ability for the Euro to maintain resilience in 2022 could remain a contentious issue.

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With rising geopolitical risks and concerns surrounding progressive economic growth impacting risk sentiment, inflation and increasing government debt could provide an additional catalyst for price action for the major currency's imminent move.

EUR/USD Technical Levels

Over the past month, EUR/USD has been trading in a key area of confluence between key psychological levels of 1.12 and 1.14 This relatively tight span containing the two above-mentioned levels has formed clear areas of support and resistance which continues to hold both bulls and bears at bay.

With price action currently trading below the 50-day moving average (MA) and trendline resistance, the moving average convergence/divergence (MACD) remains below the zero-line, a potential indication that bulls may continue to struggle to reclaim the systemic, prominent trend, at least for now.

EUR/USD Daily Chart

Chart prepared by Tammy Da Costa using TradingView

EUR/GBP Technical Levels

At the time of writing, EUR/GBP has temporarily managed to drive prices back above the 50-day moving average (Moving Average) at 0.85, currently providing support for the short-term move.

Although the downward trajectory has persisted since March last year, a break above trendline resistance has enabled bulls to retest the critical resistance of 0.854, the 14.4% Fibonacci retracement level of the 2021

EUR/GBP Daily Chart

Chart prepared by Tammy Da Costa using TradingView

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707