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EUR/USD has been on the back foot as US bond yields are rising. Bears are attacking critical support at 1.2205 but weak Nonfarm Payrolls are set to weigh on the dollar, Yohay Elam, an Analyst at FXStreet, reports.

See – Nonfarm Payrolls Preview: Forecast from five major banks for December jobs report

Key quotes

“The new administration may opt for a stimulus package worth as much as $3 trillion, including considerable infrastructure spending on top of pandemic-relief measures. Prospects of more government debt push investors away from Treasuries, with the ten-year yield floating around 1.1%. In turn, that makes the dollar more attractive.” 

“The focus shifts to the King of economic indicators – US Nonfarm Payrolls. The economic calendar is pointing to an increase of fewer than 100,000 jobs in December, a considerable slowdown, and a result of the winter wave of the virus. If the official figures also show a squeeze in hiring, the dollar could drop on expectations of more stimulus from the central bank.”

“Pfizer said that the solution is developed with BioNTech is efficient against the more sophisticated South African strain, cheering investors. On the other hand, British scientists and also politicians cast doubts about it – and more data is needed. Ursula von der Leyen, President of the European Commission, announced the EU secured more doses of the vaccine.” 

“Critical support awaits at 1.2205, which is closing level on the last day of 2020. A breach of that level opens the door to 1.2175, 1.2150, and 1.2150, all stepping stones on the way up last month.

Resistance is at 1.2275, which capped the pair in mid-December, followed by 1.2310, a former double top, and then by 1.2350 – 2021 high.”