EUR/USD takes out 1.23 hurdle on US stimulus hopes

EUR/USD closed above 1.23 on Wednesday after failing to do the same in the previous four trading days. At press time, the pair is trading near 1.2325, having set fresh multi-year highs above 1.2340 during the overnight trade. 

The pair has taken out the resistance at 1.23, with the US dollar losing ground on increased expectations for significant fiscal stimulus.

Democrats swept Georgia elections held on Tuesday, taking control of the Senate. As such, President-elect Joe Biden will now push for bigger stimulus and more regulation, higher taxes. Markets are currently focusing on prospects of more stimulus and pricing reflation, as evidenced by the US 10-year breakeven rate's rise to a 26-month high of 2.06%. 

Moreover, according to a Bloomberg article, reflation trades are getting a new lease on life across the globe. As such, the greenback could remain under pressure in Europe. 

The upside in EUR/USD will likely gather steam if the German data due at 07:00 GMT shows Factory Orders rose in November versus expectations for a 1.2% drop. 

However, while the path of least resistance appears to be on the higher side, Further gains may not happen immediately if the market focus shifts to prospects of stricter regulation and higher taxes under Biden's presidency and renewed US-China tensions. In that case, the global equities may come under pressure, putting a bid under the greenback. 

Technical levels