EUR/USD Symmetric Triangle Pattern – Choppy Sessions in Play!
Arslan Butt • 3 min read
The EUR/USD pair closed at 1.21861, after placing a high of 1.22209, and a low of 1.21535. On Wednesday, the weakness of the broad-based US dollar, along with the latest positive news on Brexit, boosted the EUR/USD pair, which is perceived as risky. The US dollar index, which measures the value of the US dollar against a basket of six currencies, dropped by 0.2% on Wednesday, weighing on the US dollar and ultimately adding to the increase in the prices of the EUR/USD pair.
The US dollar was weak on Wednesday, after US resident Donald Trump threatened not to sign the latest coronavirus relief package of $ 900 billion presented by Congress. The Democrats and Republicans have been under negotiations since July, in an attempt to reach an agreement over the second round of stimulus bills. Finally, they reached concensus and passed a bill, presenting it to the president for his signature, so that it becomes law, but at the last-minute Trump, demanded amendments to the bill, stating that otherwise, the next administration would have to deal with the delivery of the package.
Donald Trump requested that the direct payment checks to individuals according to the stimulus bill, be increased from $ 600 per person to $ 2,000 per person. This raised fears that the bill will not be delivered before the end of the year, and weighed on the US dollar, ultimately supporting the prices of the EUR/USD pair.
On the data front, at 12:00 GMT, the German Import Prices for November came in at 0.5%, against the expected 0.3%, supporting the Euro and adding further gains to the EUR/USD pair. From the US side, at 18:30 GMT, the Core Durable Goods Orders for November came in line with the forecast of 0.5%. The Core PCE Price Index for November declined to 0.0%, from the estimated 0.1%, weighing on the US dollar and boosting the upward momentum of the EUR/USD pair. The Durable Goods Orders for November rose to 0.9% compared to the predicted 0.6%, supporting the greenback. The Personal Income declined to -1.1%, against the expected -0.3%, putting pressure on the US dollar and adding further gains to the EUR/USD pair. Personal Spending in November also declined to -0.4%, against the expected -0.2%, and weighed on the US dollar.
The Unemployment Claims from last week sank to 803K, against the anticipated 882K, supporting the US dollar. At 19:00 GMT, the Housing Price Index for October surged to 1.5% against the estimated 0.6%, which supported the US dollar. At 20:00 GMT, the New Home Sales for November fell to 841K, against the projected 994K, putting pressure on the greenback and increasing the upward momentum of the EUR/USD pair. The Revised UoM Consumer Sentiment for December came in line with the forecast of 80.7. The Revised UoM Inflation Expectations for December also came in line with the projections of 2.5%.
Despite all the macroeconomic data released by the US on Wednesday, the investors mostly ignored the figures and kept their focus on the latest news from the Brexit front. In terms of Brexit, the major newswires, Bloomberg and Reuters, remained positive about getting a deal done before the end of the transition period.
According to EU sources, the EU member states have begun to provide the procedure for a provisional application of a new trade deal with the UK as of January 1, 2021. In simple words, in the coming days, EU leaders are getting ready to ratify a Brexit deal that will allow more time for the EU parliament to confirm this deal in the New Year. The speculations that the EU and the UKK are closing in on a deal on their future relationship, in order to avoid a chaotic WTO end, raised the broad risk appetite on the market, lifting European equities and US and European bond yields higher, and supporting the upward momentum in the EUR/USD prices on Wednesday.
Daily Technical Levels:
Pivot Point: 1.2190
The EUR/USD is trading at the 1.2208 level, after bouncing off over the 1.2150 level, the support area which is extended by an upward trendline. On the higher side, the pair may find resistance in the 1.2230 and 1.2269 areas. However, a bearish breakout at the 1.2175 level could extend the selling trend until the 1.2130 mark. A neutral bias dominates the market.