Euro-Dollar at Two Year Highs but Buyer Conviction Ebbs as Resistance Looms on Charts

The Euro-to-Dollar rate was on course to complete a hat-trick of gains on Thursday after reaching a fresh two-year high in the process but conviction among some buyers is waining just as nearby technical resistance threatens to act as a temporary roadblock for the single currency. 

Fawad Razaqzada, Market Analyst at ThingMarkets, tells us where the Euro-Dollar exchange rate could be headed next, now that it has broken through the 1.20 barrier.

The Euro-to-Dollar exchange rate enters the final month of 2021 by knocking on the door of the psychologically significant 1.20 area, however analysts at two investment banks we follow say patience is urged and that a concerted move above 1.20 is still a story for 2021.

Foreign exchange strategists at Morgan Stanley are looking to buy dips in the euro-dollar exchange rate in 2021, but they warn the exchange rate's approach of the 1.20 level might elicit a response by the European Central Bank in the near-term which could make the path higher prone to near-term volatility.

The Euro-to-Dollar exchange rate closed its strongest week in four on Friday after overcoming important technical obstacles on the charts but but faces further nearby impediments to upside and a deluge of economic data as well as central bank speeches that could slow the single currency's ascent this week.

The medium-term uptrend in the Euro-Dollar exchange rate is being tipped to resume before long by technical analysts at Julius Bear.

The Euro-to-Dollar rate edged higher on Friday but its baggage was growing heavier after Poland and Hungary dug in their heels in a row over the EU's budget, meaning  political discord and economic upheaval will marr the backdrop of another European Central Bank (ECB) meeting this December

The Krona was walking wounded on Thursday after the Riksbank expanded its quantitative easing programme, although local as well as international analysts still see the Swedish currency as likely to achieve new highs against the Euro and other rivals in the months ahead.