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EUR/USD has completed a much-needed correction and may be ready to rocket again after moving too high. The world’s most popular currency pair is ready to attack 1.22 as stimulus, Brexit and technicals look promising, FXStreeet’s Analyst Yohay Elam reports.

Key quotes

“Senate Majority Leader Mitch McConnell is coming around to agreeing on a stimulus bill worth around $900 billion, in line with a bipartisan suggestion laid down last week. His nod and fresh involvement by Treasury Secretary Steven Mnuchin have contributed to fresh highs in US stocks and downfall of the safe-haven dollar.

“Hopes for a Brexit deal are boosting the pound and dragging the euro higher. UK Prime Minister Boris Johnson is due to have dinner with European Commission President Ursula von der Leyen later on Wednesday. While little progress has been made on fisheries, governance and state aid, optimism is set to prevail – at least while the meeting has not ended.” 

“After Britain injected the first Pfizer/BioNTech covid vaccine shots, it may be on course to approve the AstraZeneca/University of Oxford immunization project. While the latter’s efficacy with older subjects is still in doubt, approval of the jab – of which the EU has ordered hundreds of millions of shots – is promising.” 

“The US Food and Drugs Administration is likely to greenlight the Pfizer/BioNTech vaccine on Thursday after releasing an upbeat report about its efficacy and safety, also sending the dollar down.” 

“EUR/USD is rising once again, this time with the Relative Strength Index well below the 70 level – away from overbought conditions. Downside momentum is waning and is yet to turn positive, but the currency pair is trading above the 50, 100 and 200 Simple Moving Averages – a bullish sign.” 

“Some resistance awaits at the daily high of 1.2147. It is followed by the 2020 peak of 1.2177. The round level of 1.22 is next. Support awaits at 1.205, which was a swing low earlier in the week. It is followed by 1.2040, a stepping stone on the way up.”