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Christopher Lewis
EUR/USD

The Euro rallied a bit during the trading session on Wednesday as it looks like we are getting ready to cross the finish line with a Brexit negotiation. (It is amazing what politicians can accomplish when the possibility of not going home for the holidays present itself.) That being said, we have found support at the 1.2150 level, which is essentially the top of the bullish flag from previous trading, so it is not a huge surprise to see a little bit of a bounce from here. Furthermore, the United States is very possibly going to have an even bigger stimulus package than previously agreed upon, so that could also lift the Euro.

EUR/USD Video 24.12.20

At the end of the day, the most important thing to pay attention to is that we have a major uptrend intact, and it makes sense that we would continue to go higher. In fact, I do not have any interest in shorting this pair, because even if we were to break down below the 1.21 area, I think there is even more support down at the 1.20 level that extends down to the 1.19 handle. The 50 day EMA is slicing through that “zone of support” that had previously been so resistive. With that in mind, I think this is a simple “buy on the dips” type of situation.

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Longer-term, I believe that the Euro will go looking towards the 1.23 level, but we may have a short-term pullback due to the fact that one would think that with any type of deal, the EUR/GBP pair will probably fall, having a bit of a “knock on effect” over here.

For a look at all of today’s economic events, check out our economic calendar.

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