EUR/USD struggles for direction, holds steady around 1.2200 mark

• EUR/USD failed to capitalize on modest intraday gains amid holiday-thinned trading on Thursday.
• The underlying bullish sentiment weighed on the safe-haven USD and extended some support.
• The set-up supports prospects for the emergence of some dip-buying on any corrective pullback.

The EUR/USD pair retreated around 25 pips from daily tops and was last seen hovering near the lower end of a narrow intraday trading range, just below the 1.2200 mark.

Growing market optimism about an imminent Brexit deal remained supportive of a positive trading sentiment around the equity markets. The risk-on mood continued undermining the safe-haven Us dollar, which, in turn, was seen as one of the key factors extending some support to the EUR/USD pair.

The uptick, however, lacked bullish conviction and the pair remained capped below the overnight swing highs, around the 1.2220 region. Holiday-thinned trading conditions held investors from placing aggressive bullish bets and kept a lid on any meaningful upside for the EUR/USD pair.

In the absence of any fresh fundamental catalyst, the pair is more likely to continue with its subdued/range-bound price action. That said, the incoming Brexit headlines and developments surrounding the coronavirus saga might still infuse some volatility around the EUR/USD pair.

Nevertheless, the pair remains on track to end the holiday-shortened week with modest losses, though the near-term bias remains tilted in favour of bullish traders. Hence, any meaningful slide might continue to attract some dip-buying and remain limited near the 1.2125-30 congestion zone.

Technical levels to watch