Daily FX Research

EURUSD remains supported above 1.20 as the ECB expanded PEPP by another EUR500Bn and extend it to March 2022, broadly in line with consensus expectations. The bar for a dovish surprise was too high for Lagarde to reach. It's going to be very difficult for the ECB to reverse the current EUR uptrend. Expressing concern about the current elevated levels of the EUR will not be enough to halt the accent. Until the ECB intervenes physically, EURUSD will likely continue higher into next year towards 1.25.

Progress on Brexit talks still undermine major FX. Even though a UK-EU trade deal is my base case scenario. Until a compromise on the level playing field is reached Brexit remains a downside risk for the pair. On Sunday, UK Prime Minister Boris Johnson and Ursula von der Leyen, European commission president, agreed in a "constructive" call on Sunday to "go the extra mile" for a deal as both sides reported progress in trade negotiations. If there's a compromise on the level playing field, EURUSD could extend further on the upside towards 1.22.

USD bear trend continues steadily with the DXY touching 90.50 last week. The Fed will be delivering their December meeting on Wednesday where they will communicate a dovish message by increasing the duration of asset purchases. Initial jobless claims are rising in the US due to rising cases of Coronavirus, it's likely the usd remains offered. Therefore I'm bullish the EURUSD, buying into short term bearish corrections.