The American dollar strengthens this Thursday, with EUR/USD receding from recent tops around 1.2350 to trade as low as 1.2244. The pair, which trades around 1.2275, is at risk of falling in the near-term but retains the long-term bullish stance.

Key quotes

“The dollar’s momentum seems directly linked to soaring Treasury yields, which reached levels last seen in March 2020. Hopes that coronavirus immunization through vaccines will boost economic growth by the second half of this year, and easy money coming from governments and central banks complete the picture. Also, recently confirmed Democrats’ control over the US government hints more government spending in the docket.”

“European data put some pressure on the common currency, as Retail Sales fell 6.1% MoM in November and contracted 2.9% from a year earlier, missing the market’s expectations. The preliminary estimate of the EU December inflation came in at -0.3% YoY, below expected. A positive headline came from the Economic Sentiment Indicator, which improved from 87.7 to 90.4.”

“The US has just published the November Trade Balance, which posted a deficit of $68.1 billion, worse than expected. Initial Jobless Claims for the week ended January 1 came in at 787K better than anticipated. Later into the US session, the country will publish the December ISM Services PMI, previously at 55.9.”

“Bears will have better chances on a break below the 1.2220 price zone, although buying the dips is still the name of the game.”