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  • EUR/USD scales 1.20 with a bullish marubozu-like candle.
  • Dollar-bearish sentiment backs technical breakout, suggests scope for stronger gains. 
  • The ECB is expected to boost stimulus on Dec. 10.

EUR/USD eyes stronger gains, having confirmed a bullish breakout above 1.20 on Tuesday with the biggest single-day percentage gain in nearly nine months. 

The pair surged by 1.21% on Tuesday on the back of a broad-based US dollar sell-off and closed well above 1.20. A bigger percentage gain was last observed on March 26, when the pair rallied by 1.36%. 

With a close above 1.20, the pair has ended its three-month consolidation in the 1.16-1.20 range and resumed the ascent from March lows near 1.06.

The Euro’s rise is remarkable, given it is happening just days before the European Central Bank’s Dec. 10 meeting, where policymakers are expected to announce additional monetary easing measures. 

The bearish sentiment around the dollar looks to be powering gains in the currency pair. The dollar is on the defensive and could continue to lose ground ahead of Christmas on hopes for a swift global economic recovery on the back of potential coronavirus vaccines. 

Markets are also betting on easing of the US-China tensions under the US President-elect Joe Biden’s leadership. According to The New York Times, Biden has called on Congress to pass a substantial relief package to help keep businesses, households, and local governments afloat. 

That has revived hopes for additional fiscal stimulus, adding to bearish pressures around the dollar. 

EUR/USD could break above the psychological hurdle of 1.21 later today. At the time of writing, the currency pair is trading near 1.2080. The German Retail Sales and the Eurozone Producer Price Index scheduled for release during the European trading hours may not significantly impact the single currency. During the US trading hours, the focus would be on the Federal Reserve’s Beige Book. 

Technical levels