FX.co ★ USD turns bearish immediately after sudden growth. EUR/USD took the chance for a rebound

On the eve of Christmas, investors again turned to the US dollar, which was in high demand due to the possible exit of Britain from the European Union under a "tough" scenario and uncertainty around the adoption of the next package of fiscal incentives in the United States.

This allowed the USD to move away from the lows for two and a half years, reached earlier in the area of 89.7 points, and become the strongest currency among the main competitors at the end of last week.

However, on Monday, the pressure on the protective greenback returned, as the threats that had previously troubled market participants receded into the background.

The risk appetite was spurred by reports that US President Donald Trump has finally approved the state budget for 2021, which includes a $900 billion economic aid package in response to the pandemic.

Investors welcomed the move as it restored unemployment benefits to millions of Americans and averted a federal government shutdown of the world's largest economy.

Against this background, global stock indexes rose, managing to recoup recent losses, while the greenback was forced to partially abandon its previous gains.

From the March highs of around 103 points, the US dollar has already retreated by more than 13%, falling to 90 points.

This year, low interest rates, as well as large-scale fiscal and monetary stimulus in the United States, primarily contributed to the fall in the USD.

Most experts agree that the greenback will continue to weaken. According to them, investors will abandon this "safe haven" against the background of mass vaccination against COVID-19, as well as the further easing of the Fed's monetary policy.

In addition, the United States has long been experiencing a budget deficit, and the depreciation of the US dollar, according to analysts, will have a positive impact on the attractiveness of national assets.

Taking advantage of the bearish market sentiment towards the US dollar, the EUR/USD pair tried to develop a rebound, pushing off from the weekly upward trend line in the area of 1.2185. However, the pair's rally quickly fizzled out near the 1.2250 level, which remains a strong resistance for now.

In general, the main currency pair is ready to test again the highs for two and a half years, noted earlier in December in the area of 1.2270-1.2275. From here, the bulls will open the road to 1,2300, 1,2340, and 1,2400.

Meanwhile, the inability of the latter to protect the above-mentioned upward trend line in the area of 1.2185 may provoke sales, which will throw the pair in the direction of 1.2130. Further drawdown will cancel out the bullish forecast and clear the way for a decline to 1.2060 and further to 1.2000.