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EUR/USD has been falling off the highs amid several worries and pre-Christmas profit-taking. Breakthroughs in Brexit and US stimulus talks are critical for resuming the upside, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“The last trading Friday of 2020 is here – and with it some profit-taking. That is one of the reasons for the retreat in markets and the bounce in the safe-haven dollar. Many traders are going on a Christmas holiday at the end of the day.”

“Hopes for an imminent US fiscal stimulus deal have failed to materialize on Thursday. Expectations that an accord would be reached on Friday are also fading. While politicians have vowed to work over the weekend if needed, investors would like to see an agreement before making further moves.” 

“Chief EU Negotiator Michel Barnier said that there are large obstacles and the path to a deal remains narrow. He echoes his British counterpart David Frost, who stated on Thursday that talks are blocked. GBP/USD has dropped some 100 pips from the highs and is dragging the euro down. Talks continue in Brussels and breakthrough could boost both currencies, but that may have to wait for the weekend.”

“The Relative Strength Index is just below 70 – marginally outside overbought conditions. Momentum remains to the upside and the pair is still above the 50, 100 and 200 Simple Moving Averages, yet to resume the uptrend, an extended correction may be needed.” 

“Support awaits at 1.2240, the daily low, followed by 1.2210, a swing high earlier in the week. Resistance is at 1.2272, the fresh 2020 peak, followed by the round 1.23.”