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Record Low EU Gas Price Catalyzes Euro Strength
12/27/2022 11:00 AMThe EUR/USD pair is moving in a corrective trend at 1.0645.
The positive dynamics of the asset are developing against the backdrop of declining gas prices: at the end of last week, the Dutch gas hub TTF recorded a drop below 1.0K dollars per thousand cubic meters for the first time since the beginning of the year, and the cost of contracts with delivery in February is now 930.0 dollars per thousand cubic meters, which was last observed in January, before the start of the military conflict in Ukraine. Several factors contribute to the correction of the gas price: the warm weather that persists in most of Europe and the agreement of the region's authorities to introduce a limit wholesale price for natural gas of 180.0 euros per megawatt-hour from February 15 if this quote is will be exceeded. It allows the EU countries to fill the storage facilities to the maximum and conclude long-term contracts for the next year, as well as reorient their gas system to liquefied natural gas (LNG): yesterday in Germany, the first of the three planned floating LNG terminals was launched, through which supplies of energy carriers have already begun 10.0M cubic meters per day, which is 16 times less than the rate of pumping through the Nord Stream gas pipeline.
The US dollar declines, trading at 103.700 in the USD Index on the back of a report from MasterCard Inc., according to which, from November 1 to December 24, retail sales in the country grew only by 7.6%, which is inferior to the increase of 8.5% last year. Apparel and restaurants saw the biggest gains, up 4.4% and 15.1%, respectively, while the electronics sector shed 5.3%, as high inflation pushes consumers away from expensive durables.
On the daily chart, the trading instrument is correcting, confidently keeping in the local ascending corridor.
Technical indicators point to continued growth: fast EMAs on the Alligator indicator are well above the signal line, and the AO oscillator histogram forms corrective bars high in the buying zone.
Resistance levels: 1.0720, 1.0930. | Support levels: 1.0570, 1.0390.