EUR/USD eases from tops around 1.2350

EUR/USD loses momentum and retreats to the 1.2320 area.
German flash CPI came in at 0.5% MoM in December.
US ADP report dropped by 123K during last month.

Pablo Piovano FXStreet

EUR/USD keeps the firm pace above the 1.2300 mark albeit below earlier peaks in the 1.2350 area.

EUR/USD: Upside capped in the mid-1.2300s

EUR/USD advances for the third session in a row beyond 1.2300 the figure, although it gives away part of initial gains on a sudden bout of USD-strength.

In fact, the greenback gathered further traction following the recovery in yields of the key US 10-year benchmark to the 1.04% zone, area last visited in March 2020.

In the data space, German flash inflation figures showed consumer prices are expected to have gained 0.5% in December, while the annual drop is seen at 0.3%. Across the pond, the ADP report noted the US private sector lost 123K jobs during last month vs. expectations for a meagre 88K increase.

Next on tap will be Factory Orders, the EIA’s report on crude oil supplies and the FOMC Minutes of the December meeting.

What to look for around EUR

The upside momentum in EUR/USD regains fresh oxygen at the beginning of 2021 and the pair manages to trade past the 1.2300 mark for the first time since April 2018. So far, EUR/USD appears supported by prospects of a strong recovery in the region (and abroad), which is in turn underpinned by extra fiscal stimulus by the Fed and the ECB. In addition, real interest rates continue to favour the euro area vs. the US, which is also another factor supporting the EUR along with the huge long positioning in the speculative community.

EUR/USD levels to watch

At the moment, the pair is gaining 0.05% at 1.2302 and a breakout of 1.2349 (2021 high Jan.6) would target 1.2413 (monthly high Apr.17 2018) en route to 1.2476 (monthly high Mar.27 2018). On the other hand, the next support emerges at 1.2129 (weekly low Dec.21) seconded by 1.2058 (weekly low Dec.9) and finally 1.2032 (23.6% Fibo of the 2017-2018 rally).

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Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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