The euro rallied a bit in Wednesday’s trading session as it looks like we are preparing to cross the finish line with a Brexit negotiation. (It’s amazing what politicians can accomplish when the option of not going home for the holidays presents itself.) That being said, we found support at the 1.2150 level, which is essentially the top of the flag. bullish from previous trades, so it’s not a huge surprise to see a bit of a rebound from here. In addition, the United States is very likely to have an even bigger stimulus package than previously agreed, which could also push the euro up.
Video EUR / USD 24.12.20
Ultimately, the most important thing to pay attention to is that we have a major uptrend intact, and it makes sense that we would keep going higher. In fact, I have no interest in shorting this pair, because even if we were to fall below the 1.21 area, I think there is still more support at the 1.20 level stretching all the way to the handle 1.19. The 50-day EMA slices this “support zone” that was previously so resistive. With that in mind, I think this is a simple “buy on dips” type situation.
Longer term, I think the euro will look towards the 1.23 level, but we might have a short term pullback due to the fact that one would think that with any kind of deal, the EUR / GBP pair will likely drop, having a bit of an effect here.
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