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  • EUR/USD reversed an intraday dip to the 1.2200 mark and climbed back closer to multi-year tops.
  • A modest bounce in the equity markets extended some support and helped limit the early slide.
  • COVID-19 jitters, stronger US GDP print underpinned the USD and capped gains for the major.

The EUR/USD pair refreshed daily tops, around the 1.2255-60 area in the last hour, albeit quickly retreated few pips thereafter. The pair was last seen trading around the1.2235 region and had a rather muted reaction to the US macro data.

The pair managed to attract some dip-buying near the 1.2200 round-figure mark and moved well within the striking distance of over two-and-half-year tops set last Thursday. The intraday bounce was exclusively sponsored by a modest US dollar pullback from daily tops, though lacked any strong follow-through.

The approval of a long-awaited US stimulus package helped offset worries about the discovery of new coronavirus strain and the imposition of strict lockdowns/travel restrictions in the UK. This was evident from a goodish rebound in the equity markets, which failed to assist the US dollar to preserve its intraday gains.

That said, the underlying cautious mood continued lending some support to the greenback’s safe-haven status and kept a lid on any further gains for the EUR/USD pair. The USD was further supported by the final US GDP print, which showed that the economy expanded by 33.4% annualized pace in the third quarter as against 33.1% estimated.

Tuesday’s US economic docket also features the release of Richmond Manufacturing Index, Conference Board’s Consumer Confidence Index and Existing Home Sales. The data, along with developments surrounding the coronavirus saga, will influence the USD price dynamics and produce some short-term trading opportunities around the EUR/USD pair.

Technical levels to watch