EUR/USD: Strong bounce elusive despite bear failure near 1.20

EUR/USD struggles to gather upside traction despite signs of bear fatigue near 1.20. The bulls remain on the sidelines, with the US data signaling economic recovery and pushing yields higher. 

Sellers ran out of steam near 1.20 for the second straight day on Wednesday after the pro-EU former European Central Bank (ECB) President Draghi accepted the Italian President's offer to form a government. 

The pair essentially formed a daily candle with a long lower wick, implying bear fatigue near 1.20. So far, however, that has failed to inspire buying. EUR/USD is trading near 1.2020 at press time, having reached a high of 1.2043 in Asia. 

Possibly capping the bounce is the upbeat US economic data released Wednesday. The US ADP Employment and ISM Non-Manufacturing bettered estimates, raising prospects of a faster recovery in the world's largest economy. The 10-year Treasury yield jumped seven basis points to 1.15% on Wednesday and is currently consolidating on yesterday's gains. 

Also, concerns regarding Eurozone's slow coronavirus vaccine delivery could be weighing over the euro. 

The pair could drop below 1.20 unless the Eurozone Retail Sales data for December due at 10:00 GMT shows a significant rise in consumer spending. In that case, traders may put a bid under the single currency, helping EUR/USD avoid a move below 1.20. The US weekly jobless claims and factory orders data due later Thursday could influence the broad-based dollar demand. 

Technical levels