EUR/USD to rise cautiously towards 1.22

EUR/USD has begun the last full trading week of 2020 on the up thanks to hopes for Brexit and US stimulus deals as investors are shrugging off a Christmas lockdown in Germany for now. Technically, Monday’s 4-hour chart is painting a bullish picture with the 1.22 level on bulls’ radar, FXStreet’s Analyst Yohay Elam reports.

Key quotes

“Once again, significant Brexit developments that send the pound surging also carry the euro along for a ride. Intense negotiations in Brussels are likely to continue impacting the euro. The clock is ticking down toward the end-of-year expiry of the transition period and volatility may further rise.” 

“Democrats and Republicans continue deliberating a new relief package in the lame-duck session. Markets will probably cheer any accord that adds money to the world’s largest economy – and hope for more when President-elect Joe Biden enters the White House in January.”

“Americans will begin receiving the jabs on Monday. The inoculations could not come soon enough – the seven-day rolling averages of infections, hospitalizations and deaths have been hitting new records in America. The worsening covid situation is not major news, yet Germany’s announcement of a severe nationwide lockdown is a bitter Christmas gift. Grinding Europe’s largest economy to a near-halt is undermining the euro’s rally.”

“Euro/dollar has bounced off the 50 Simple Moving Average on the 4-hour chart and maintains its upside momentum – both bullish signs. The Relative Strength Index is still below 70, outside overbought conditions.” 

“Some resistance awaits at the daily high of 1.2160, followed by the 2020 peak of 1.2177. Further above, 1.22 and 1.2250 are in play. Support is at 1.2105, which provided support on Friday, followed by 1.2060, last week’s low.”