EUR/USD refreshes 32-month high, teases 1.2300 amid hesitant progress of US stimulus

EUR/USD remains on the front foot after piercing the multi-month high, currently up 0.32% intraday to 1.2288, ahead of Wednesday’s European session. The currency major recently teased the 1.2300 level with a high of 1.2294, amid the broad US dollar weakness.

The US dollar index (DXY) bears the burden of market expectations that the US government will release the coronavirus (COVID-19) aid payments soon. The upbeat hopes gained strength after US Treasury Secretary Mnuchin announced that the $600 paycheck will be out tonight (Tuesday night per the US).

It should, however, be noted that the Senate Majority Republican Leader Mitch McConnell earlier showed readiness to block the $2,000 relief payment but later on put forward the bill, as a part of the procedure, to recall the bulls. The Congress member McConnell also added clauses about social media companies’ protections and election fraud studies to his proposal for votes.

Elsewhere, the US Assistant Secretary for Health Brett Giroir told MSNBC that the US should extend test requirements for travelers beyond Britain after finding a fresh case of the covid variant found in the UK that lacks travel history. Virus woes also push UK PM Boris Johnson to expand Tier 4 restrictions while Japan is up for major hurdles for the international visitors.

Against this backdrop and a light calendar, S&P 500 Futures remain mildly bid while stocks in Asia trade mixed. Though, the DXY teases the monthly low, also lowest since April 2018, while declining to 89.73 by press time.

Moving on, December’s Chicago Purchasing Managers’ Index, expected 57 versus 58.2 prior, will precede November’s Pending Home Sales MoM, forecast 0.0% against -1.1% previous readouts, to entertain EUR/USD traders. However, major attention will be given to the US aid package and virus updates. Should US policymakers refrain from announcing the much-awaited stimulus and/or covid conditions worsen, the US dollar may bounce off the multi-month low.

Technical analysis

Having successfully crossed the monthly high, highest since April 2018, EUR/USD bulls are up for challenging the 32-month peak surrounding 1.2415. However, the 1.2300 round-figure may offer an intermediate halt during the surge. Meanwhile, the pair’s pullback moves below the previous high of the month, 1.2272, may visit of the confluence of December 04 high and 21-day SMA near 1.2173/78.