EUR/USD to test the doble-top at 1.2310 as the mood may improve

EUR/USD has been struggling amid concerns about the covid strain and a slow pace of vaccinations. If markets already price in the depressing developments, there is room to rise and re-attack 1.2310, according to FXStreet’s Analyst Yohay Elam. Meanwhile, the focus is on Georgia's special elections which are critical to further US stimulus. 

Key quotes

“The UK announced a third – and harsh – nationwide lockdown to slow the spread of coronavirus and its highly contagious variant. Germany extended its restrictions and other countries may follow as the winter wave continues raging. The US is also struggling with record hospitalizations, and data on both sides of the pond is probably incomplete amid the holidays.”

“The vaccination campaign is advancing at a snail's pace. Germany is leading the eurozone, but with only around 0.32% of its population having received the inoculation. France's distribution is in the hundreds. While the US is doing better, bottlenecks and disarray have resulted in only 1.38% of the population receiving either the Pfizer/BioNTech or Moderna jabs.” 

“Markets prefer both Democratic candidates Jon Ossof and Raphael Warnock to win their respective races against Republican senators David Perdue and Kelly Loeffler. A dual victory would provide President-elect Joe Biden room to push for more stimulus. Reports of long lines in Atlanta could boost stocks and weigh on the safe-haven dollar – potentially sending EUR/USD above 1.23 before voting ends.” 

“Some resistance was at the daily high of 1.2280. It is followed by the critical double top of 1.2310. Above that level, the stretch target for the pair is 1.24. Support is at 1.2240, the daily low, followed by 1.2210, a swing low in the late hours of 2020.”