EUR/USD: There is room for recovery to 1.2300

EUR/USD has recovered as markets calm after the initial covid strain-related panic. The passage of the US stimulus and Brexit hopes could boost the euro to the 1.23 level, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“While this COVID-19 mutation is highly contagious, there is no evidence that it is resistant to vaccines according to the European Medicines Agency. The EMA – which approved the Pfizer/BioNTech jab – helped calm the atmosphere. Moreover, there is little doubt that the strain is already circulating on the continent. If the variant is everywhere and already partially responsible for the winter wave, adopting new restrictive measures would do little to curb the spread at this point. As long as vaccines cope with the virus, markets have room to rise.” 

“Prime Minister Boris Johnson reportedly offered a major concession on fisheries, making raising the chances of a Brexit deal. If the breakthrough is confirmed, the common currency would likely be carried higher by a sterling rally.” 

“Congress has finally passed the $900 billion stimulus bill and it now awaits President Donald Trump's signature. This development had been priced in, but it also contributes to optimism.”

“Resistance awaits at the daily high of 1.2250, followed by the 2020 peak of 1.2272. Further above, round 1.23 is eyed. Support is at the daily low of 1.2213, followed by 1.2175, a high point last week, and then by 1.2130 – a double bottom.”