EUR/USD Bounces off Over 1.2175 Support – A Quick Technical Outlook!

Posted Monday, December 21, 2020 by
Arslan Butt • 2 min read
The EUR/USD pair closed at 1.22546, after placing a high of 1.22712, and a low of 1.22252. After rising for four consecutive days, the EUR/USD pair dropped on Friday, amid the risk aversion and the rebound of the US dollar.
The retreat of the EUR/USD pair from multi-year highs looked like a correction and profit-taking on Friday. However, the main reason was the modest recovery in the US dollar. Despite the strong macroeconomic data from the Eurozone, the EUR/USD pair failed to hold onto previous gains, dropping on Friday.

On the data front, at 12:00 GMT, the German PPI figures for November were released, showing a rise to 0.2%, against the expected 0.1%, providing support for the Euro. At 14:00 GMT, the German IFO Business Climate for December came in, showing a rise to 92.1, against the projected 90.2, also boosting the Euro, and capping any further losses in the EUR/USD pair. The Current Account Balance from the Eurozone for September showed a surplus of 26.6B, against the exepectations of 22.6B, supporting the single currency Euro. At 18:54 GMT, the Belgian NBB Business Climate for December came in at -8.4, against the projected -12.4, also boosting the Euro and limiting the downward momentum of the EUR/USD pair.

From the US side, at 20:00 GMT, the CB leading Index for November was released, indicating an increase to 0.6%, against the estimated 0.4%, which supported the US dollar and weighed on the EUR/USD pair. The weekly outlook for the EUR/USD pair remains bullish, as the pair continued to rise throughout the week for many reasons, including the declining US dollar, amid the rising hopes for additional financial aid from Congress, vaccine rollouts and the rising hopes of a Brexit deal.

All these factors kept the EUR/USD pair on the bullish track for the week. The Euro remained strong against the US dollar throughout the week, because of the strong macroeconomic figures from the Eurozone side. Europe’s economic outlook remains strong, as the data suggests, and the local currency, the Euro, has strengthened against the US dollar, causing the EUR/USD pair to rise on the board.On the flipside, the losses in the EUR/USD pair could be attributed to the latest news that several European countries have banned flights to and from the United Kingdom, and others are considering such action, in an attempt to block a new strain of the coronavirus, which is sweeping across southern England, from establishing a strong foothold on the continent. The Netherlands were first to announce an immediate ban on Sunday, while Belgium, Austria, Germany and Italy followed suit.

Daily Technical Levels
Support               Resistance
1.2214                  1.2297
1.2161                  1.2327
1.2131                  1.2381
Pivot Point:       1.2244The EUR/USD fell sharply, to trade at the 1.1286 level, facing an immediate support level of 1.2180. Here, it completes a 61.8% Fibonacci retracement on the hourly timeframe; thus, the odds of a bullish reversal remain strong here. However, the violation of this level could extend the selling trend until the next support area of 1.2152 today. On the higher side, resistance remains at levels around 1.2202 and 1.2220 today. Good luck!

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