EUR/USD holds gains above 1.2200 as US stimulus news weigh on Dollar

• EUR/USD extends Monday’s recovery moves as bulls flirt with intraday high.
• US House passes $2,000 paycheck, turns down Trump’s veto over defense bill.
• Republicans eye blocking the heavy stimulus in Senate.
• Light calendar keeps risk catalysts on the driver’s seat.

EUR/USD eases from the day’s top of 1.2243 to 1.2240, up 0.21% intraday, while heading into Tuesday’s European session. In doing so, the pair bulls cheer broad risk-on sentiment that drags the US dollar downward. However, cautious sentiment ahead of the key verdict on the US coronavirus (COVID-19) aid package guards the quote’s immediate upside.

Despite US President Donald Trump’s surprise signing of the covid aid package, while also demanding the $2,000 paycheck and removal of Section 230, uncertainty over the much-awaited stimulus prevails.

Even so, the House escalated the bill favoring a higher weekly relief fund, while also rejecting Trump’s push for defense acts, which in turn favored the risks so far in Asia. As a result, the US Dollar Index (DXY) bears the burden of the market’s cautious optimism while declining to 90.10, down 0.21% on a day.

Also portraying the upbeat sentiment could be the S&P 500 Futures that followed Wall Street’s gains to refresh record top above 3,700. Additionally, stocks in Asia-Pacific and the US 10-year Treasury yields also remain mildly positive amid a quiet session comprising the final trading days of 2020.

Moving on, global markets will keep eyes on the US Senate moves as policymakers are determined to question Trump’s push during his last days in the White House. In that case, the US dollar may witness corrective recovery on the back of a risk aversion wave. Though, the absence of major volume, coupled with broad optimism backed by the covid vaccine, can keep the greenback pressured.

Technical analysis

A short-term symmetrical triangle formation established since December 17, currently between 1.2190 and 1.2240, restricts immediate moves of EUR/USD.