EUR/USD Forecast: Next relevant target for bulls is pegged near 1.2340 area

• Sustained USD selling bias pushed EUR/USD to fresh 32-month tops on Wednesday.
• The momentum ran out of the steam near the 1.2300 mark amid thin trading volumes.
• The technical set-up favours bullish traders and supports prospects for additional gains.

The EUR/USD pair shot to fresh 32-month tops during the first half of the trading action on Wednesday, albeit the momentum lost steam just ahead of the 1.2300 mark. The prevalent upbeat market mood continued weighing on the US dollar's safe-haven status and was seen as one of the key factors behind the early move up. Investors quickly looked past a Senate delay in US stimulus checks and remained optimistic about the likelihood of additional financial aid. It is worth reporting that Senate Majority Leader Mitch McConnell on Tuesday blocked an effort to hold an immediate vote to raise the COVID-19 relief payments from $600 to $2,000.

The development, to a larger extent, was offset by the US Treasury Secretary Steve Mnuchin's announcement that qualified Americans could begin receiving the stimulus check of $600 from Tuesday night. The already strong global risk sentiment got an additional boost after UK regulators approved the use of the AstraZeneca/Oxford coronavirus vaccine. This comes amid growing bets for a strong global economic recovery in 2021 and expectations that the Fed will keep interest rates low for an extremely long time. The combination of factors remained supportive of the underlying bullish sentiment across the global equity markets.

However, relatively thin liquidity conditions on the back of year-end holidays help investors from placing aggressive bullish bets and kept a lid on any runaway rally for the major. There isn't any market-moving economic data due for release from the Eurozone, leaving the pair at the mercy of the USD price dynamics. The US economic docket features some second-tier releases and might fail to provide any meaningful impetus. That said, the broader market risk sentiment might influence the USD price dynamics and produce some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the pair has already confirmed a fresh bullish breakout through a symmetrical triangle and seems poised to appreciate further. With technical indicators holing in the bullish territory and still far from being in the overbought territory, a move beyond the 1.2300 mark, en-route the 1.2340 congestion zone, remains a distinct possibility.

On the flip side, any meaningful pullback below the triangle resistance breakpoint might continue to attract some dip-buying near the 1.2300 mark. The latter coincides with over one-week-old ascending trend-line (part of the symmetrical triangle), which if broken might prompt some technical selling and accelerate the fall back towards the 1.2130-25 support area.