Shortly after the opening of European trading session, the pair climbed to 1.2166. The gains were driven by news that the German authorities will authorize use of the Covid-19 vaccine developed by Pfizer and BioNTech on December 23.
The single currency came under pressure later due to a pullback in the GBPUSD pair, as well as statements about a hard lockdown set to begin in Germany on December 16. The pound retraced to its intraday low amid Brexit deal uncertainty.
Cable halted its decline at 1.3280, from which the price reversed sharply upward. News broke that Britain and the EU are close to a deal when EURGBP reached 1.3380. Meanwhile, EURUSD jumped from 1.2122 to 1.2169. The dollar fell against nearly all major currencies due to sterling’s performance.
Today’s macro agenda (GMT 3)
- Manufacturing and services PMIs (November) are due out at: 11:15 (France), 11:30 (Germany), 12:00 (Eurozone), 12:30 (UK)
- 16:30 Canada: core inflation rate (November), foreign securities purchases and wholesale sales (October); US: retail trade (November)
- 17:45 US: manufacturing and services PMI (December)
- 18:00 US: NAHB housing market index (December);
- 18:30: EIA weekly petroleum status report
- 22:00 US: FOMC interest rate decision, FOMC post-meeting statement and economic projections
- 22:30 US: FOMC press conference
At the time of writing, the euro was trading at 1.2170. The next resistance is at 1.2177. Market participants continue to brush aside the upsurge in Covid-19 infection rates, while pinning hopes that mass vaccinations will resolve the pandemic in 2021. Meanwhile, Brexit news continues to grab headlines.
In Europe, major currencies are trading in positive territory against the US dollar. The EURUSD pair has been trending sideways since December 3 (9 trading days). Given the way buyers are paring the declines, we think they will try to gain a foothold above 1.2178 today, with the target level at 1.2190-1.2195.
We also tend to believe the key pair will make a failed attempt to break out of the 1.2180 level. A retracement under 1.2180 will prompt buyers to close longs, and this, in turn, will push the price down to 1.2140. Traders will be focused today on Brexit and the FOMC meeting. The highlight will be the press conference held by Fed chairman Jerome Powell.