The EURUSD has rallied significantly over the last weeks closing into December, showing that the weakness of the dollar is still prevalent. The pair is likely to see a lot of momentum either built up or broken down by Brexit. The Brexit situation will have a massive influence on what happens to the pound, but it also will have a significant amount of impact on the euro, as it will help help cross-border transactions between Europe and one of its most important trading partners.
The Covid-19 situation is another factor that will be moving this pair over the course of December. The Covid-19 figures in the European Union have begun to slow down, while the numbers in the US continue to accelerate. This is providing a little bit of a boost for the euro, as currency traders have been paying close attention to the coronavirus in general. This will continue to be a factor until the vaccine gets distributed, which will be well into 2021 although new outlets have been optimistic to get it out within December.
The Fed has released its Meeting Minutes, showing that they are willing to do whatever it takes to help the economy during this pandemic. There are a lot of worries to whether or not Congress will pass a Covid-19 relief bill soon, which could stress the US growth situation as well.
The pair is expected to be choppy with short-term down moves. A great opportunity to buy on those low points as the market does look very bullish, between 1.19 and 1.20 there is a significant amount of resistance it will take work to get through. If the pair breaks above the 1.20 level, it will open up the door to the 1.23 price and beyond. We know that the Fed is not going to be tightening monetary policy for at least a couple of years, so as the world becomes more “comfortable”, it will continue to sell dollars. Keep in mind that we are heading towards Christmas, which means that liquidity will go down.
Looking at the H4 chart, the pair settles above the 1.1900 level, with the 200 simple moving average (green, 4-hours), and the 100 simple moving average (red, 4-hours).
The bull move was big enough that the pair broke the last swing high and surpassed the 1.1940 resistance. A new monthly high was established near 1.1975 and the pair is currently trading well above many important support price lines.
We remain bullish with all eyes at the Fridays US NFP number which will at the very least increase the volatility of the pair.
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