December 8’s afternoon trading session showed that the US equity market remains indecisive.
Despite finding resistance around the 4750 levels, the S&P 500 index trades around the 4685 range. Each of the Dow indices and NASDAQ 100 declined by 0.45%. However, the three top US indices remain higher by over 3.5% based on their week-on-week performance. The VIX is nearly 21.50, indicating a 0.30 points loss and might go lower to about 20.0 (its range before the news about Omicron started flying all over the place).
The Market’s Primary Drivers
The news on the effectiveness of the COVID-19 vaccines against its new variant (Omicron) is one reason for the stalling of the market equity on December 8. The second reason is the rumor that the UK might resume lockdown restrictions to prevent the fast spread of the variant, which would invariably mean that some states in the US might do the same.
Regarding the first reason, South African scientists recently released the results of their study where they discovered that the COVID-19 variant wasn’t neutralized despite two dosages of the Pfizer COVID-19 vaccine. However, they predicted that a third dose would neutralize the virus as it happened with previous COVID-19 strains.
In the meantime, a financial times report today states that the British prime minister might announce the execution of the second plan for COVID-19 restrictions. Part of this plan is the requirement that anyone can’t be admitted into large public places without their vaccine passport. Also, the plan suggests that employers should allow those whose workload can be performed remotely to do so. The ultimate goal is to minimize the spread of the new COVID-19 variant (Omicron).
Technical Buying Boosts EUR/USD
Technical buying on December 8 boosts the EUR/USD with the pair reversing a 7-day decline to rise over the 1.129 range again, surge past the 21-day ma of 1.1328, then steadying at about 1.1351. Their current performance indicates a gain of 0.76% in the last 24 hours. A descending trend line is forming a resistance for the pair.
This same trend line was support for the EUR/USD till two months ago. Last month, the EUR/USD fell deeper than this trend line, but it now forms a resistance around the 1.1255 regions. If the EUR/USD can break past this resistance, it might eventually move towards the 1.13829 levels, representing a similar gain as last week.
Increased Market Volatility
The rising unsettledness over Omicron has heightened volatility in the forex market in the last few weeks. The good news is that the Omicron reportedly has mild effects compared to the COVID-19, which should positively affect the equity market.
However, mild infections could cause a breakdown of some nations’ healthcare systems if it spreads fast among many people. Hence, it is no wonder the UK government is considering imposing another lockdown. Consequently, the volatility in the forex market might not dampen over the next few days, and the EUR/USD may continue to experience massive fluctuations.