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  • EUR/USD is off the lows, looking to regain 1.22 amid risk-off mood.
  • New covid strain-led lockdowns spooks markets, boosts the dollar.
  • The US fiscal stimulus deal lifts gold, offers support to the major.

EUR/USD looks to regain the 1.2200 level ahead of the European open, attempting a bounce from daily lows of 1.2179.  

The renewed uptick in the major can be attributed to a pause in the US dollar’s rally across its main peers, as markets rethink the implications of the strengthening of the lockdowns globally while a much-awaited fiscal stimulus deal comes into an agreement in the US.

A new covid strain detected in the UK and the resultant stricter lockdowns and global travel curbs announced boosted the haven demand for the greenback.

The US dollar index opened the week with about a 20-pips bullish gap and extended its recovery from multi-year troughs into the third straight day, now adding 0.45% to 90.40.  

Despite the US dollar strength, the downside in the spot appears cushioned, partly in response to a rally in gold amid an agreement on the US fiscal stimulus deal. The US lawmakers reached a $900 billion covid relief aid deal late Sunday, with the voting scheduled on Monday.

Additionally, the EUR/GBP cross driven strength also keeps the euro buyers hopeful. The slide in GBP/USD, due to the Brexit stalemate and the UK’s new mutated virus-led concerns, has driven EUR/GBP back beyond 0.9100 levels.

Looking ahead, the risk sentiment and USD dynamics will continue to remain the main market drivers amid incoming virus updates and a lack of relevant macro news on both sides of the Atlantic.

EUR/USD technical levels