EUR/USD looks firm but recedes from daily highs near 1.2150

• EUR/USD regains the composure and advances to 1.2150.
• German trade surplus widened a tad to €18.2 billion in October.
• Markets’ attention stays on the ECB meeting and EU Summit on Thursday.

The single currency appears to have regained the smile following recent weakness and pushes EUR/USD to the 1.2150 region on Wednesday.

EUR/USD stronger on firm risk appetite

After three consecutive daily pullbacks, EUR/USD attempts a recovery to the mid-1.2100s and remains always supported by weekly lows around 1.2080 (Monday).

In the meantime, the broad-based improvement in the risk complex stays supported by reflation hopes – particularly in response to recent auspicious vaccine news – potential extra US stimulus and a positive outcome from the Brexit negotiation.

However, the shared currency is expected to be under the microscope in the next hours in light of the ECB meeting and the EU Summit, where the Recovery Fund will be in the centre of the debate.

Earlier in the domestic docket, the German trade surplus ticked higher to €18.2 billion in October and the Spanish Industrial Production contracted less than expected 1.6% on a year to October.

Later in the US data universe, MBA’s Mortgage Applications are due followed by Wholesale Inventories, JOLTs Job Openings and the EIA’s weekly report on US crude oil supplies.

What to look for around EUR

The upside momentum in EUR/USD faltered in the proximity of the 1.22 barrier last week in spite of the favourable atmosphere in the risk complex. In the very near-term, EUR/USD appears supported by prospects of a strong recovery in the region along with the increasing likelihood of extra stimulus in the US. Risks to this positive view emerge from the potential political effervescence surrounding the EU Recovery Fund and increasing chances of further ECB easing to be announced as soon as at the December meeting (Thursday).

EUR/USD levels to watch

At the moment, the pair is gaining 0.18% at 1.2123 and a breakout of 1.2177 (2020 high Dec.4) would target 1.2413 (monthly high Apr.17 2018) en route to 1.2476 (monthly high Mar.27 2018). On the other hand, the next support emerges at 1.1920 (high Nov.9) seconded by 1.1800 (low Nov.23) and finally 1.1745 (weekly low Nov.11).