There’s no stopping EURUSD bulls after they blew 1.20 levels that was not only psychological one but also a crucial limit of multi-month consolidation. Clearly, this triggered a lot of stops that are at least partly responsible for the move that we are looking at. On the surface one could argue that Biden promising “generous stimulus bill” is one to blame but really, this whole USD weakness is mostly driven by general market euphoria.
This is very clear when we compare the situation to January 2018 when markets were also in euphoric moods, sending stocks higher and USD lower. EURUSD broke out of similar consolidation and – this is a warning for the sellers – surged above 1.25, even if only for a short period of time. Another striking similarity is extreme levels of EUR net speculative positioning that ultimately weighed on the pair, but not until some major gains were made.
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