EUR/USD Faces Resistance at 1.2050 – Brace for a Trade Opportunity!

The EUR/USD pair closed at 1.20481, after placing a high of 1.20497, and a low of 1.19519. After falling for four consecutive sessions, the EUR/USD pair rose on Friday, amid the rising risk sentiment in the market.

The risk sentiment was supported by the hopes that the US stimulus bill will be delivered as soon as the senate approves a budget resolution on Friday. The new resolution will allow the Democrats to go ahead with a $ 1.9 trillion coronavirus relief bill, even if the Republicans go against the bipartisan support.

After this news, the hopes that Americans will receive the aid sooner than expected weighed on the safe-haven US dollar and increased the demand for risk appeal. The EUR/USD, which is seen as risky, gained traction after this news and started to rise, almost recovering the losses of the previous 2 days. Meanwhile, following the risk sentiment, the major indices on Wall Street also rose – the Dow Jones Futures were up by 150 points and 0.5%, the S&P 500 Futures also rose by 0.5%, and NASDAQ was up by 0.4%.

At 12:45 GMT, the French prelim Private Payrolls for the quarter were released, showing a drop to -0.2%, against the projected -0.7%, which supported the Euro and added further to the gains in the EUR/USD pair. The French Trade Balance for December came in at -3.4B, against the expected -4.2B, which boosted the Euro and pushed the EUR/USD pair higher. At 14:00 GMT, the Italian Retail Sales figures for December were released. They indicted an increase to 2.5%, against the expected 1.5%, supporting the Euro and adding additional gains to the EUR/USD pair on Friday. Another reason behind the rising demand for the Euro was the easing of the coronavirus crisis in Europe. On Saturday, France reported a fall in the numbers of new coronavirus infections and the number of patients being treated in hospitals. This eased the pressure on the health system, as the vaccine rollout in the country was slow.

France reported almost 20,586 newly confirmed coronavirus cases, which was down from the previous day’s 22,139, marking the third straight daily drop in numbers. Meanwhile, the Irish chief medical officer said that Ireland was suppressing the third wave of coronavirus infections faster than any other European country. These positive developments from Europe on the coronavirus front, added strength to Euro and supported the EUR/USD prices.

The EUR/USD pair is trading at around 1.2038, and facing immediate resistance at 1.2055, extended by the 50 periods EMA on the four hourly timeframes. On the lower side, the EUR/USD is likely to find support around 1.2000 and 1.1965. The bearish bias remains strong below the 1.2055 level, as the bulls are exhausted, and the pair is looking for correction. It may take a dip until 1.2019 and 1.2002 before making further bullish moves. Buying could be seen over 1.2050 and selling below the same level today!