In the run up to the new year, the deterioration in the dollar set the euro up for a solid start alongside some key fundamentals - which have since turned around. Let's review:
1. Virus situation in Europe was worsening but expected to be over and done with by early Q1. That narrative has now shifted with restrictions set to be prolonged, such as seen in Germany - which could carry on to Easter potentially.
2. Europe looks set to progress well on the vaccine front. That narrative has since been dented after running into delays on the rollout and the recent dispute with AstraZeneca.
3. ECB didn't appear too bothered about euro strength in December. That narrative has changed a little now with policymakers jawboning the currency at every opportunity, although verbal intervention may be as far as they will go for now.
With all the factors shifting around, EUR/USD has failed to gather much upside traction as of late and is once again trading back under 1.2100 today.
That puts the spotlight back on key support around 1.2059-63 as sellers retain near-term control on a push back below its key hourly moving averages @ 1.2126-37.
That keeps a lid on euro gains for the time being while the downside support highlighted is also limiting any major drop in the pair. However, looking elsewhere, the euro looks to be struggling to find much reprieve as EUR/GBP breaks down:
The pair seemed to be indecisive with a break below key support around 0.8866-67 over the past few days but is tracking lower once again to around 0.8807 today.
A better overview of the technical break to the downside is the weekly chart:
Price is challenging a break below the confluence of the key weekly moving averages @ 0.8838-42. That might yet compound the euro's woes even more this week.