EUR/USD trims gains and drops toward 1.2120

• Euro losses momentum versus US dollar, recovers against the pound.
• EUR/USD backs after testing 2020 highs, remains sideways.

The EUR/USD pair pulled back sharply during the last hours amid a really of the US dollar across the board. It is dropped from 1.2176, the highest level in a week to 1.2126. The euro erased most of its daily gains and as of writing it trades at 1.2135, above Friday’s close but far from the top.

The DXY trimmed losses and rose back above 90.70 after falling to the lowest since 2018 near 90.30. The recovery of the dollar gained speed amid a reversal in Wall Street. The Dow Jones is still up by 0.48% but off highs while the S&P 500 gains 0.55%.  US yields remain higher for the day.

The first person in the US received the COVID-19 vaccine. Optimism around the outlook for the pandemic eased on new about lockdowns in London and New York.

EUR/USD fails at 1.2170

The euro climbed earlier to test the 2020 highs but after matching the December high at the 1.2175 zone pulled back. The EUR/USD pair continues to consolidate at the top, unable to make a clear break above 1.2170 neither below 1.2070.

The main trend points to the upside. The euro needs to break clearly the 1.2170 to open the doors to more gains.

Technical levels