EUR/USD retreats further from multi-year highs, hits fresh lows under 1.2230

• Euro trims weekly gains versus US dollar on Friday.
• EUR/USD heads for highest weekly close since.

The EUR/USD dropped during the American session amid risk aversion and as the US dollar staged a modest recovery. The pair fell to 1.2224, hitting a fresh daily low. Despite Friday’s slide it is holding onto weekly gains and with the bullish potential intact.

The retreat from the multi-year highs in EUR/USD so far looks like a correction. The next support area could be seen at 1.2200 and below at 1.2170. A decline under 1.2050 could suggest some exhaustion to the upside. The 1.2240 area is now the immediate resistance followed by the weekly top at 1.2270/75.

Technicals offered a boost to the EUR/USD pair during the week. The key driver was the decline of the US dollar. The DXY is up on Friday, trading above 90.00, about to post the lowest weekly close since April 2018.

Risk appetite eased on Friday and favored the correction of the US dollar. Ahead of the New Year, trading volume will likely trend lower. Volatility could start rising, considering that is has been slowly rising over the last weeks, risk events like Brexit and the higher odds of sharp moves triggered by the low volume environment.

Technical levels