The pair will likely continue rising today since momentum is against the dollar.
Buy the EUR/USD and target 1.2360.
You can also place another buy stop above 1.2360.
Add a stop loss at 1.2300
Place a sell stop order at 1.2300.
Have a take-profit at 1.2273
Add a stop loss at 1.2350.
The EUR/USD rallied in the overnight session after the Democrats took control of the Senate and after the weak private employment numbers.
More Stimulus Ahead
The US is heading towards another massive stimulus after yesterday’s election victory by Democrats in Georgia. In total, Democrats have signaled that they will provide more funding to individuals and states. They have also talked about large infrastructure spending.
The impact of such spending is that the ongoing dollar slide could continue in the foreseeable future. Notably, the victories came on the same day as the ADP said that US private employers shed about 123,000 people from their payrolls in December.
Analysts are also pessimistic about tomorrow’s nonfarm payroll numbers. Those polled by Reuters expect the unemployment rate will rise to 6.8% from 6.7%. They also see the nonfarm payrolls increasing by just 71,000. This means that the American economy has more than 10 million unfilled jobs due to the coronavirus pandemic.
Later today, the Institute of Supply Management (ISM) will publish the vital non-Manufacturing PMI data. Economists expect the PMI will drop from 55.9 in November to 54.6 in December. The EUR/USD will also react to the initial jobless claims and trade data from the United States.
EU Inflation Ahead
Meanwhile, the EUR/USD pair will likely react mildly to the latest flash Consumer Price Index (CPI) data from Europe. That’s because traders don’t expect any surprises today.
Analysts expect that the EU CPI dropped at an annualised rate of 0.2% while the core CPI rose by just 0.2%. These figures are significantly below the ECB target of 2%. Further, Eurostat will publish the regions’ retail sales while the European Commission will release the consumer and business confidence data.
EUR/USD traders will also watch the monetary policy by the ECB, which will provide more colour to its December interest rate decision.
EUR/USD Technical Outlook
The EUR/USD pair is trading at 1.2330, which is slightly below yesterday’s high of 1.2347. On the four-hour chart, it has moved above the ascending triangle pattern. It is also slightly above the 25-period and 15-period EMAs.
Therefore, the pair will likely continue rising today since momentum is against the dollar. As such, the pair will likely test the next resistance at 1.2360. However, a move below the support at 1.2273 will invalidate this thesis.