In the early New York session, the EUR/USD pair is trading at the level of 1.2250 with the upward potential heading for the 1.2268. The pair is likely to reach a strong resistance level of 1.2285 in the next few hours due to the USDX weakness. A GAP has been formed at the 89.65 level, and we hope that the pair will cover it in the coming days and will develop the upward momentum.
Another factor to weigh on USDX is that the United States voted in favor of increasing the stimulus payments to Americans to $2,000 from the approved $600 and sent the decision to the Senate to vote. If approved, it could further weaken the US dollar index, and EUR/USD will gain upward momentum to reach the 1.23 level in the short term.
On the 1-hour chart, you can see that EUR/USD is trading above the 21-day SMA and the 200 EMA which shows that the euro market is strongly bullish. However, a breakout below the 200 EMA could lead to a correction to the support levels of 1.2085.
Our recommendation is to trade the EUR/USD pair in the uptrend. So, if you see a retracement to the 21 SMA line, it would be a good buying opportunity. A pullback to the 8/8 Murray level at 1.2207 will give the market more bullish strength.
We should avoid buying the euro/dollar pair if it trades below the 200 EMA as this could accelerate the decline to the 7/8 and 6/8 Murray level where we expect it to consolidate.
Market sentiment for December 29 shows that 68.75% of traders are selling EUR/USD. This means that even though the bullish trend is prevailing in the market, the euro/dollar pair could face the 1.23 zone in the short term.
Trading tip for EUR/USD for December 29 – 30
Buy above 1,2220 (SMA 21) with take profit 1.2268 and 1.2285, stop loss below 1.2185.
Buy if the pair rebounds around 1.2207 (8/8), with take profit at 1.2268 (+1/8 of Murray) and 1.2285, stop loss below 1.2175.
