EUR/USD Mid-Session Technical Analysis for December 3, 2020

The Euro is soaring against the U.S. Dollar on Thursday, hitting its highest level since April 2018. The move above 1.2100 is being driven by signs of progress towards U.S. fiscal stimulus and optimism about COVID-19 vaccines that are making the U.S. Dollar a less-desirable investment.

At 13:42 GMT, the EUR/USD is trading 1.2152, up 0.0035 or +0.29%.

The Euro’s move to its highest level in more than two years is largely due to the dollar’s weakness rather than the Euro’s strength.

The strength in the Euro is a little surprising to some given that the European Central Bank (ECB) has said it will provide further stimulus to help the Euro Zone when it meets on December 10. Traders will also be paying close attention to any comments about the Euro’s strength. Most traders agree the EUR/USD could weaken if ECB policymakers express discomfort with the additional currency appreciation over its September 1 top at 1.2011.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when the rally took out the April 30, 2018 main top at 1.2138.

The main trend changes to down on a move through 1.1800. This is highly unlikely today, but due to the prolonged move up in terms of price and time, and the possibility the ECB may express discomfort with its current price level, traders should watch for a closing price reversal top formation.

This chart pattern won’t change the trend to down, but if confirmed, it could trigger the start of a 2 to 3 day correction. Its purpose will be to alleviate some of the upside pressure created by the weaker U.S. Dollar.

Daily Swing Chart Technical Forecast

Given the Euro is in the window of time for a closing price reversal top and the absence of any resistance, the direction of the EUR/USD is likely to be determined by trader reaction to 1.2117.

Bullish Scenario

A sustained move over 1.2117 will indicate the presence of buyers. If this continue to create enough upside momentum then look for the rally to possibly extend into the next main top at 1.2413 over the near-term.

If we define resistance as a price level that stopped a level in the past then 1.2413 is the next valid upside target.

Bearish Scenario

A sustained move under 1.2117 will signal the presence of sellers. A close under this level will form a potentially bearish closing price reversal top. If confirmed, this could trigger a 2 to 3 day break into at least 1.1981.