EUR/USD: 1.23 emerges as resistance ahead of Georgia runoff elections

EUR/USD struggles to establish a foothold above 1.23.
Technical studies and market positioning show scope for a pullback.
Democratic sweep in Georgia elections could bring stronger buying pressure.

Omkar Godbole FXStreet Contributor

EUR/USD failed to keep gains above 1.23 for the third consecutive trading day on Monday.

The repeated rejection above the psychological level, coupled with the bearish divergence of the 14-day Relative Strength Index (RSI) and the negative or bearish reading on the daily chart MACD histogram suggests scope for a pullback.

Market positioning validates the technical picture. "The latest IMM data show net dollar shorts climbed to $30.4 billion in the week ended Dec. 29 while net EUR/USD longs stood at $21.875 billion, reflecting the market's view that the trend will continue in 2021," according to Reuters.

As such, 1.23 is now the level to beat for the bulls. The breakout could happen if Democrats sweep the Georgia elections for both Senate seats due on Tuesday. That's because a Democrat-controlled Senate could pave the way for more significant fiscal stimulus, according to Goldman Sachs. Further, the market is currently pricing a Republican win in at least one race.

Data-wise, the focus would be on the German Unemployment Rate, due at 08:55 GMT, and the US ISM Manufacturing, scheduled for release at 15:00 GMT.

At press time, the pair is trading near 1.2272, representing a 0.19% gain on the day. The dollar came under pressure in Asia after the US Food and Drug Administration said that two different mRNA vaccines now show remarkable effectiveness of about 95% in preventing Covid-19 infection in adults.

Technical levels

EUR/USD

Overview
Today last price	1.2272
Today Daily Change	0.0023
Today Daily Change %	0.19
Today daily open	1.2249

Trends
Daily SMA20	1.2192
Daily SMA50	1.1996
Daily SMA100	1.1897
Daily SMA200	1.1552

Levels
Previous Daily High	1.231
Previous Daily Low	1.2231
Previous Weekly High	1.231
Previous Weekly Low	1.2181
Previous Monthly High	1.231
Previous Monthly Low	1.1924
Daily Fibonacci 38.2%	1.228
Daily Fibonacci 61.8%	1.2261
Daily Pivot Point S1	1.2217
Daily Pivot Point S2	1.2184
Daily Pivot Point S3	1.2138
Daily Pivot Point R1	1.2296
Daily Pivot Point R2	1.2342
Daily Pivot Point R3	1.2375

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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