EUR/USD Forecast: Break or bounce at critical resistance? Bulls look strong, data eyed

• EUR/USD has been advancing above 1.19 amid vaccine and political optimism. 
• A busy day on the data front is set to determine the next moves. 
• Wednesday's four-hour chart is pointing to critical resistance.

A ten-week high is in sight – but does EUR/USD have the momentum to break higher? The critical level to watch is 1.1920, which is the monthly peak and the highest since early September. The currency pair has been climbing in response to a better market mood, unfavorable for the safe-haven US dollar. 

The market rally – sending US stock indexes to record highs – has been underpinned by the start of President-elect Joe Biden's transition. The lower political uncertainty and the potential nomination of former Federal Reserve Chair Janet Yellen as Treasury Secretary has been keeping markets happy.

Vaccine optimism also remains robust, despite a somewhat worrying development from the AstraZeneca/University of Oxford project. The 90% efficacy rate seen for a lower dosage regimen used a sample of subjects under 55, thus missing out on more vulnerable people. Nevertheless, the upbeat mood prevails.

All eyes are now on a busy day in US data, a result of Thursday's Thanksgiving holiday. US A significant bulk of figures awaits traders at 13:30 GMT. Economists expect third-quarter Gross Domestic Product to be confirmed at 33.1% annualized, a substantial rebound after the crash in the second quarter. 

See US GDP Preview: Good reasons for an upside surprise, but not necessarily a dollar surge

Durable Goods Orders statistics for October provide a peek into fourth-quarter GDP. Investment growth is forecast to have moderated last month.

See US Durable Goods Orders October Preview: Unemployment what unemployment?

Weekly Unemployment Claims are watched more closely after a jump last time. Both initial applications and continuing ones are set to decline. 

See US Initial Jobless Claims Preview: STurn that rear-view mirror around

An hour and a half later, additional data is due out. New Home Sales, the University of Michigan's Consumer Sentiment and Consumer Spending for October – the latter dependent on fiscal stimulus – are eyed. 

The Federal Reserve's meeting minutes from early in the month may reveal how close the Fed is to ramp up its bond-buying scheme. Any hint of action in December could weigh on the dollar. 

Back in the old continent, investors are encouraged by France's gradual reopening and concerned that Germany may tighten restrictions. Chancellor Angela Merkel is set to debate new measures with regional leaders. If they opt for a severe lockdown, the euro could struggle. 

COVID-19 cases are falling in Europe and remain on the rise in the US:

Source: FT

Overall, the calendar comeback is in full swing, with data having the upper hand. 

EUR/USD Technical Analysis

Euro/dollar is eyeing the 1.1920 level mentioned earlier. Momentum on the four-hour chart is to the upside, the pair is trading above the 50, 100 and 200 Simple Moving Averages and the Relative Strength Index is shying away from the 70 level – thus outside overbought conditions. 

The bulls are in full control.

Above 1.1920, the next level to watch is 1.1960, which played a role in September. The yearly high of 1.2010 is next. 

Support awaits at 1.1895, which capped euro/dollar earlier this month, followed by 1.1850, a support line seen last week. Further down, 1.1820 and 1.1770 await EUR/USD.