EUR/USD Breakout Triple Top Pattern – Bullish Bias Dominates!

The EUR/USD pair closed at 1.20497, after placing a high of 1.20657, and a low of 1.20196. Despite the strength of the US dollar on Monday, the EUR/USD pair continuously posted gains, amid the improved risk sentiment in the market. The economic growth expectations rose sharply after the hopes for fiscal stimulus from the US and the accelerated vaccination program, which supported the risk sentiment.

On Monday, the Dow Futures were up by 120 points and 0.4%, the S&P 500 Futures also increased, by 11 points or 0.3%, and NASDAQ climbed about 47 points and 0.4%. The European stocks closed higher on Monday too, as markets started tracking positive sentiment in Asia and the US. The pan-European Stoxx 600 index rose by 0.3%, supporting the risk environment in the market.

Apart from European or global stocks, the EUR/USD pair was also affected by the release of macroeconomic data from Europe on Monday. At 12:00 GMT, the German Industrial Production for December came in, showing a decline to 0.0%, against the expected 0.1%, weighing on the Euro and capping any further upside in the EUR/USD pair. At 14:30 GMT, the Sentix Investor Confidence for February was released, indicating a decline to -0.2, against the projected 4.1, which weighed on the Euro and limited the gains in the EUR/USD pair.

The EUR/USD pair continued to rise, following the market risk-flows after the hopes of economic recovery increased. The US House and Senate each passed a budget resolution on Friday, that started the reconciliation process that would allow President Joe Biden’s $ 1.9 trillion rescue package to get through the Democratic-held senate with a simple majority, without Republican’s support.

Despite the disappointing Non-Farm payroll data from the US on Friday, the expectations for much stronger job figures from Q2 onwards rose, as business surveys offered encouragement, and low coronavirus hospitalization rates allowed a partial reopening of the economy in many states. The progress made in the vaccination rollout added more strength to the increased job expectations and boosted the risk sentiment, ultimately supporting the rise in the EUR/USD pair’s prices on Monday.

On Sunday, US treasury Secretary Janet Yellen implied something similar, predicting full US employment next year, given that the proposed $ 1.9 trillion package is passed by the US government soon.

On the vaccination front, the US Centers for Disease Control and Prevention said that almost 35 million doses of coronavirus vaccine had been administered so far, which showed the progress in the vaccine rollout and pushed the ongoing risk flows in the market, ultimately adding to the prices of the EUR/USD pair, which is perceived as risky. On the European front, the spring season in Europe is expected to face a shortage in vaccine supply that could delay reopening in the member states, which would weigh on their economic recovery into summer. However, these concerns were not able to reverse the bullish sentiment surrounding the EUR/USD pair on Monday, and it continued to rise on the day.

Daily Technical Levels
Support             Resistance
1.2037                1.2057
1.2026                1.2066
1.2017                 1.2077
Pivot Point:       1.2046

The EUR/USD is trading with a bullish bias at the 1.2077 level, disrupting the triple top resistance level of 1.2050. On the higher side, the EUR/USD pair is likely to offer a further buying trend until the 1.2094 area. The 10 & 20 periods EMA support a buying trend, so let’s consider taking a buying trade over the 1.2050 level, until the resistance area of 1.2094. A bullish crossover at 1.2050 could extend further buying until 1.2094. At the same time, the support continues to hold around 1.2050 and 1.2018. Good luck!