EUR/USD climbs beyond mid-1.2100s, refreshes session tops amid notable USD supply

The intraday USD selling picked up pace during the early North American session and pushed the EUR/USD pair to fresh daily tops, around the 1.2160-65 region in the last hour.

The pair managed to find decent support ahead of the 1.2100 round-figure mark and staged a goodish bounce from near one-week lows touched earlier this Tuesday. A turnaround in the global risk sentiment prompted some fresh selling around the safe-haven US dollar, which, in turn, was seen as a key factor driving the EUR/USD pair higher.

Despite doubts about the size and timing of the US stimulus package, hopes for a strong economic recovery remained supportive of the underlying bullish tone in the financial markets. The risk sentiment got an additional boost after the International Monetary Fund revised its forecast for 2021 global economic growth to 5.5% from 5.2%.

The IMF, its latest World Economic Outlook report, cited stronger-than-expected momentum in the second half of 2020 behind the upbeat economic outlook, albeit warned that the second wave of infections and new variants of COVID-19 poses risk. The IMF further added that countries should continue to support economies until vaccine-powered normalization is underway.

Market participants now look forward to the release of the Conference Board's US Consumer Confidence Index for some impetus. Traders might further take cues from the US stimulus headlines, which could impact the market sentiment and influence the USD. The key focus, however, will remain on the FOMC decision on Wednesday and Thursday's release of the Advance US Q4 GDP report.

Technical levels to watch