EUR/USD to extend the bounce once above 1.2225

EUR/USD fell to 1.2129 this Monday amid a risk-off mood spurred by UK news but the pair is recovering the ground lost. According to FXStreet’s Chief Analyst Valeria Bednarik, euro/dollar needs to surpass the 1.2225 level to see further gains.

Key quotes

“Investors rushed into the greenback after the UK announced a much more contagious coronavirus strain and announced tougher restrictions in the country. Additionally, the lack of Brexit progress fueled the pound’s sell-off, favoring the greenback’s rally.”

“US Senators agreed on a historic $900 billion coronavirus relief package and will vote on a proposed bill this Monday, alongside government funding for a whole year. The news fell short of offsetting the ruling panic, although demand for the greenback eased and majors are bouncing from intraday lows.”

“The short-term picture suggests that the EUR/USD pair is not yet out of the woods, as it continues to develop below a now flat 20 SMA. Buying interest, however, surged near a bullish 100 SMA. The mentioned 20 SMA provides dynamic resistance around 1.2225, with potential gains limited as long as the price remains below it.”