After the current retreat, the common currency may attract fresh demand and challenge the mentioned 1.2100 barrier
Coronavirus vaccine approvals lifted market sentiment overnight, driving the safe-haven dollar to fresh long-term lows. On Wednesday, the greenback is licking its wound, trying to regain some traction amid oversold conditions. The USD index dipped to the 91.10 area, last seen in 2018. The index was climbing to the 91.30/40 region during the early hours in Europe, deriving support from a weaker upside bias in risky assets as global investors made a pause after the recent rally.
The greenback made a bounce after President-elect Joe Biden said he wants to keep tariffs on China unchanged so far. Earlier, the American currency was pressured by renewed speculations about fiscal stimulus in the United States.
Against this backdrop, EURUSD rallied to April 2018 highs marginally below the 1.2100 handle before retreating slightly. The euro was last seen trading in the 1.2050 zone. If the corrective pressure intensifies any time soon, a dip below 1.2000 could be expected.
However, in the longer term, the pair will likely stay within a broader uptrend as the economic recovery could accelerate in 2021 amid global vaccination. After the current retreat, the common currency may attract fresh demand and challenge the mentioned 1.2100 barrier, followed by the 1.2145 level.
In the short-term, traders will focus on the ADP’s jobs data and Powell’s speech due later today. Should the economic report disappoint, the dollar will come under renewed pressure during the North-American session. If so, EURUSD could regain a bullish bias on the intraday charts and retarget the 1.2100 figure which now represents the key hurdle for euro bulls. On the downside, the immediate support is represented by the 1.2000 psychological level. In a wider picture, the pair is buoyed as long as the prices stay above the ascending 20-DMA, today at 1.1880.