Is the Euro Santa Rally Over?
The DAX is rallying, and so is the Euro. Their connection is positive. However, by Jan 1, it appeared as if the Euro, after gains two weeks earlier and the better part of December, was slowing down, posting losses as a result. Explaining these higher highs was the retreating greenback. However, if technical candlestick arrangement counts, the Euro Santa rally could be over and lower lows across major pairs highly likely in days ahead.
Admittedly, most major pairs, including the Euro and the GBP, gained versus the USD. It has been the state of affairs in the last couple of weeks. The sell-off could be stymied--and the greenback recovers, despite milestone developments, especially in the European Union. Although the United Kingdom broke-off, the approval by health authorities of the AstraZeneca COVID-19 vaccine could be a game-changer across the globe, igniting trade and resumption to normalcy, a net positive for the greenback. Tapping from this revival is the USD and JPY. Both currencies posted impressive gains versus the Euro on Friday last week, starting off the year with a strong footing. It may be a precursor of what's lying ahead even marking the end of what has been a tumultuous 2020 for the greenback.
Impact on the Euro:
Bearish. A recovering economy, approvals of effective vaccines, and renewed confidence from the investor community (the successful brokering of a deal between the UK and the Eurozone) may shift the table for the USD. Further losses this week could effectively mark the end of the Santa Rally and the beginning of a greenback stretch.
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