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  • EUR/USD gained some traction after the ECB announced its latest monetary policy decision.
  • The ECB left its key interest rates unchanged and increased the size of its PEPP by €500 billion.
  • The emergence of some fresh selling around the USD provided an additional boost to the pair.

The buying interest around the shared currency picked up pace in the last hour and pushed the EUR/USD pair to fresh session tops, around the 1.2135 region.

The pair regained some positive traction on Thursday, snapping three consecutive days of losing streak, and for now, seems to have stalled its recent pullback from a two-and-half-year top. A subdued US dollar price action was seen as one of the key factors that extended some initial support to the EUR/USD pair.

The common currency got an additional boost after the European Central Bank (ECB), as was widely expected, decided to leave its benchmark interest rates unchanged at the end of the December meeting. The ECB increased the size of its Pandemic Emergency Purchase Program (PEPP) by €500 billion to a total of €1,850 billion.

In the post-meeting press conference, the ECB President Christine Lagarde said that the increase in PEPP reflects fallout in economic activity and added that the incoming data suggest a more pronounced near-term impact of the pandemic. She reiterated that uncertainty remains high and that the ECB is reading to adjust all instruments as needed.

The dovish comments, however, did little to prompt any selling, instead the emergence of some fresh selling assisted the EUR/USD pair to build on its intraday positive move. The greenback met with some fresh supply during the early North American session following the disappointing release of US Initial Weekly Jobless Claims.

In fact, the number of Americans filing for unemployment-related benefits jumped to 853K during the week ending December 5, up sharply from the previous month’s upwardly revised reading of 716K. Separately, the headline US CPI rose 0.2% MoM in November and the yearly rate stayed unchanged at 1.2%, albeit did little to provide any impetus.

With the latest leg up, the EUR/USD pair has now climbed to a resistance marked by the top end of a short-term descending trend-channel. The mentioned channel constitutes the formation of a bullish continuation flag chart pattern, which if cleared decisively should set the stage for a further appreciating move for the major.

Technical levels to watch