- EUR/USD faced rejection near 1.2200 and retreated around 35-40 pips from daily tops.
- A modest USD rebound prompted some selling, though the downside remained limited.
- Wednesday’s US macro releases did little to provide any meaningful impetus to the pair.
The EUR/USD pair retreated around 35-40 pips from daily swing highs and has now dropped to the lower end of its intraday trading range, around the 1.2170-60 region.
The pair failed to capitalize on its early gains to the 1.2200 round-figure mark, instead met with some fresh supply during the mid-European session amid a goodish US dollar rebound. The USD uptick, however, lacked any obvious fundamental catalyst and runs the risk of fizzling out rather quickly amid a positive trading sentiment around the equity markets.
Investors largely shrugged off the US President Donald Trump’s threat to not sign a long-awaited $892 billion COVID-19 stimulus bill, instead took cues from the reopening of the UK-French border. The move signalled a step back toward normality after the discovery of a new variant of the coronavirus and might undermine the greenback’s safe-haven demand.
Meanwhile, the EUR/USD pair had a rather muted reaction to mixed US macro releases. According to the data released this Wednesday, the headline Durable Goods Orders recorded a stronger-than-expected growth of 0.9% in November. Meanwhile, core durable goods orders, which exclude transportation items, fell short of market expectations and increased by 1.1%.
Separately, Initial Weekly Jobless Claims came in to show that the number of Americans filing for unemployment-related benefits fell to 803K during the week ended December 18. This was way below consensus estimates pointing to a reading of 885K and the previous week’s upwardly revised 892K, albeit did little to impress the USD bulls.
It will now be interesting to see if the EUR/USD pair is able to attract some fresh buying or a slides back to challenge weekly swing lows, around the 1.2130 region. A sustained break below will be seen as first signs of bullish exhaustion and turn the pair vulnerable to extend this week’s retracement slide from over two-and-half-year tops, around the 1.2270-75 region.
Technical levels to watch
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