EUR/USD holds onto recovery gains below 1.2200 amid cautious market mood

• EUR/USD sustains the 40-pips Asian bounce.
• USD remains offered amid stimulus blockage, virus woes.
• US data dump and virus updates closely eyed.

EUR/USD consolidates the Asian bounce ahead of the European open, as the US dollar holds the lower ground amid mixed market sentiment.

The sentiment remains cautiously optimistic, with markets eagerly awaiting a Brexit trade deal breakthrough while on the other hand, US President obstructed a $900 billion covid stimulus, calling the bill as a disgrace.

A fresh risk-aversion gripped Asia on Wednesday after Trump said that he doesn’t want to sign the covid relief bill, although it failed to lift the dollar’s haven demand amid positive regional equities.

The main currency pair awaits fresh impetus for the next push higher, as a fresh batch of critical economic releases will be released from the US docket later today. Also, fresh virus updates will be eyed for fresh cues on the market sentiment.

The greenback also remains on the back amid the downbeat US CB Consumer Confidence data. The American consumer confidence dropped for the second straight month to hit a four-month low of 88.6 in December, re-igniting concerns over the economic recovery.

The pullback in the main currency pair can be mainly attributed to the resurgent haven demand for the US dollar against its key rivals, as markets fret over the new covid strain found in the UK and its impact on the global economic recovery.

Meanwhile, hopes for positive developments on the Brexit front could likely offer further support to the euro bulls. Looking ahead, pre-Christmas holiday-thinned trading is likely to keep the major volatile.

“Currency pairs are quite volatile in thinned market’s conditions ahead of the Christmas Holidays, and profit taking is also playing a role in this week´s market’s action,” explains Valeria Bednarik, FXStreet’s Chief Analyst.

EUR/USD technical levels