EUR/USD Forecast: Symmetrical triangle breakout awaited for fresh bullish impetus

• Renewed USD selling bias pushed EUR/USD to over one-week tops on Tuesday.
• The prevalent upbeat market mood was seen undermining the safe-haven USD.
• A sustained move beyond YTD tops will set the stage for further near-term gains.

The EUR/USD pair added to the previous day's modest gains and continued scaling higher through the first half of the trading action on Tuesday. The momentum was exclusively sponsored by the emergence of some fresh selling around the US dollar and pushed the pair to over one-week tops during the early European session. Hopes that the US pandemic relief package would be expanded added to the optimism over a Brexit deal and further boosted investors' confidence.

The US House of Representatives voted to increase stimulus payments to qualified Americans to $2,000 from $600 on Monday and sent the measure to the Senate for a vote. The development fueled expectations about an economic recovery and increased investors' appetite for perceived riskier assets. This was evident from the prevalent bullish trading sentiment around the global equity markets, which was seen as a key factor undermining demand for the safe-haven greenback.

Meanwhile, trading volumes are likely to remain thin during the holiday-shortened week. Moreover, there isn't any major market-moving economic data due for release on Tuesday, either from the Eurozone or the US. This, in turn, leaves the pair at the mercy of the USD price dynamics and the broader market risk sentiment. That said, developments surrounding the coronavirus saga and US stimulus headlines might still infuse some volatility. This could eventually influence the pair and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the overnight bounce reinforced a one-week-old ascending trend-line support and the subsequent move up favours bullish traders. The pair was now seen making a fresh attempt to build on the momentum beyond another descending trend-line, which constitutes the formation of a symmetrical triangle. Some follow-through buying beyond YTD tops, around the 1.2270-75 region, will reaffirm the constructive outlook and pave the way for additional gains. The pair might then surpass the 1.2300 mark and aim to test the 1.2340 hurdle.

On the flip side, any meaningful pullback might continue to find decent support near the 1.2200 mark (ascending trend-line). Sustained weakness below might prompt some technical selling and accelerate the slide further towards the 1.2130-25 congestion zone. Failure to defend the mentioned support levels might negate the near-term positive outlook and turn the pair vulnerable to break below the 1.2100 mark, towards the next relevant bearish target, around the 1.2060-55 area.