- EUR / USD witnessed a modest pullback on Friday amid a rebound in demand for the USD.
- Cross strength derived from strong rally in EUR / GBP extended support.
- Any significant pullback is likely to remain limited and viewed as a buying opportunity.
The pair EUR/USD it traded with a slight negative bias during the early days of the US session and was last seen hovering around the daily lows, around the 1.2120 region.
The pair was unable to capitalize on its initial rally, instead finding a new supply near the 1.2165 area amid a modest rally in demand for the US dollar. The stagnation of the next round of US fiscal stimulus affected investor sentiment. This was evident by weaker trade sentiment around equity markets, which in turn drove some safe-haven flows to the dollar.
The USD rally, however, lacked an obvious fundamental catalyst and remained limited. This, coupled with some strength driven by the crossover from a strong rally in EUR / GBP, extended some support to the EUR / USD pair. The British pound witnessed some aggressive selling on the last trading day of the week and came under pressure from mounting concerns about the possibility of a no-deal Brexit.
Meanwhile, the launch of vaccines for the highly contagious coronavirus disease appears to have raised expectations for a rapid global economic recovery. This, in turn, could do even more to limit any significant rise in the dollar. Therefore, any corrective pullback for the EUR / USD pair is more likely to be shallow and could still be seen as a buying opportunity.
On the economic data front, the softer-than-expected release of the US Producer Price Index (PPI) for November did little to impress USD bulls and went largely unnoticed. The US economic calendar on Friday also features the revised version of the Michigan Consumer Sentiment Index, although it is unlikely to provide a significant boost to the EUR / USD pair.
Technical levels
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