The Euro is trading at a multi-year high against the US Dollar on Tuesday prompted by a weakening greenback. The EURUSD is up 0.37 percent at the time of writing.
Buyers picked up interest in the common currency after the US House of Representatives passed a bill to increase relief payments to Americans. The bill is now in the hands of the Senate, which, as it stands, will likely vote it down.
Senate Republicans are under pressure to deliver a stimulus deal before the 5th of January as the results of the Georgian senate election will be disclosed. There remain two seats up for grabs in these elections and both are likely turning Democratic, an outcome that could mean additional stimulus during 2021.
Meanwhile, the Euro has been strengthening ever since the EU-UK Brexit trade agreement was resolved late last week. The optimism from a no-deal Brexit helped to support the EURUSD which Euro bulls then took one step further. News of a trade pact between the EU and China has also contributed to the upbeat mood.
From a technical perspective, the EURUSD has yet to firmly break above the crucial 1.228 handles with momentum remaining in the neutral zone on the daily chart. The pair will need to establish credibility at this level to build enough support above the 2018 swing low. A convincing push above the 1.23519 resistance level would solidify the bullish claim.
On the flip side, a move below 1.2220 may change the trend down. Looking further, the next point of interest for bears will be the channel between the 20-day moving average and the 0.236 Fibonacci retracement level around 1.21205.
(Chart Source: Tradingview 29.12.2020)
Looking ahead, if the US Congress does approve the new US stimulus bill, the surprise will likely give bulls the energy they need to push higher as the buck should weaken.
Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.