- EUR/USD struggled to preserve its intraday gains and started retreating from mid-1.2200s.
- A goodish USD rebound was seen as a key factor behind the pair’s sharp intraday pullback.
- Relatively thin trading volumes might help limit the fall amid absent fundamental catalyst.
The EUR/USD pair surrendered a major part of its intraday gains to three-day tops and slipped below the 1.2200 mark during the mid-European session.
Relief over the long-awaited US stimulus and a post-Brexit trade deal boosted investor’s confidence on the first day of a new trading week. This, in turn, undermined the US dollar’s safe-haven demand and assisted the EUR/USD pair to scale higher through the first half of the European trading session.
The momentum, however, ran out of the steam near mid-1.2200s amid a goodish rebound witnessed around the USD. As investors looked past the positive developments, worries about the discovery of a new faster-spreading variant of the coronavirus helped limit the intraday decline for the greenback.
Apart from this, a strong pickup in the US Treasury bond yields helped revive the USD demand. This was seen as one of the key factors behind the EUR/USD pair’s pullback from higher levels. The pair has now retreated over 50 pips and moved back closer to the lower end of its daily trading range.
Any subsequent fall is likely to find some support near a one-week-old ascending trend-line, currently around the 1.2185 region. A convincing break below might prompt some technical selling and accelerate the slide towards the 1.2125-30 congestion zone amid holiday-thinned trading conditions.
There isn’t any major market-moving economic data due for release on Monday, either from the Eurozone or the US. That said, developments surrounding the coronavirus saga might still infuse some volatility in the financial markets and produce some short-term trading opportunities around the EUR/USD pair.
Technical levels to watch
Share
