The Euro is trading lower against the US dollar as we enter the European trading session over fears the new coronavirus strain will further dampen economic growth and plunge the Eurozone into another round of lockdowns.
The Omicron coronavirus variant, which was first detected in South Africa, is likely to spread worldwide, posing a "very high" global risk of infection surges that could have "severe consequences" in many areas representatives said from the the World Health Organization (WHO) on Monday.
Also earlier today, European Central Bank Vice-President Luis de Guindos, his concern about the new strain of Covid19 and mentioned it will bring a new round of uncertainty to the economic recovery.
"Economic situation is marked by a high degree of uncertainty (...) we have the outbreaks of infections, the appearance of new variants,"Mr De Guindos told a financial event in Madrid.
Some countries such as Japan and Israel have already prohibited foreigners from entering the country while Great Britain has reintroduced stringent covid testing measures for new arrivals and it seems it will only be a matter of time before Europe follows suite.
Looking ahead today, the main drivers of the EUR/USD currency pair will be the release of inflation figures from Spain and Germany and also the business confidence and consumer confidence figures from the Eurozone as a whole.
In the American session will see the release of pending home sales figures as well as economic speeches from US Federal Reserve President Jerome Powell and Fed board member Michelle Bowman.
The EUR/USD currency pair is once again hovering around its weakest level since June 2020, and Friday’s bounce of nearly 100 points is probably just a dead cat bounce and most likely temporary.
Apart from the major economic news today, the focus will be on the emergence of the new Omicron coronavirus variant and just how fast it is spreading. Should there be an uptick in cases the Euro is likely to suffer as investors once again flock to the US dollar for safety reasons.