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EUR/USD gained some strong positive traction on Monday amid sustained USD selling bias but relatively thin trading conditions warrant some caution before placing aggressive bullish bets, FXStreet’s Haresh Menghani reports.

Key quotes

“Concerns about the discovery of a new faster-spreading variant of the coronavirus might temper enthusiasm. This, along with a goodish pickup in the US Treasury bond yields, might extend some support to the greenback and keep a lid on any runaway rally for the major, at least for now.”

“Trading volumes are expected to remain light in another holiday-shortened week. This, in turn, warrants some caution for aggressive bullish traders and before positioning for any further near-term appreciating move for the pair.”

“A move back towards retesting the 1.2270-75 region, over two-and-half-year tops touched on December 17, looks a distinct possibility. Some follow-through buying beyond the 1.2300 round-figure mark has the potential to push the pair further towards the 1.2340 resistance zone.”

“Any meaningful pullback towards the 1.2200 mark might still be seen as a buying opportunity and remain limited near the triangle support, around the 1.2185 region.”