EUR/USD advances higher toward 1.2300 on renewed USD weakness

• EUR/USD gained traction in the second half of the day.
• US Dollar Index is pushing lower toward 89.50.
• Improving market sentiment seems to be weighing on the greenback.

The EUR/USD pair spent the first half of the day in a relatively tight range near 1.2770 but started to edge higher during the American session with the greenback coming under renewed selling pressure. As of writing, the pair was up 0.37% on a daily basis at 1.2295.

USD selloff picks up steam

Earlier in the day, the cautious market mood allowed the USD to stay resilient against its peers. However, the upbeat macroeconomic data releases from the US and prospects for a Democratic majority in the Senate after the runoff election in Georgia provided a boost to market sentiment.

Reflecting the positive mood, Wall Street's main indexes are up around 0.3% on the day and the US Dollar Index is losing 0.38% at 89.53.

The data published by the ISM showed on Tuesday that the Manufacturing PMI in December climbed to its highest level since August 2018 at 60.7 to show that the business activity expanded at an impressive pace at the end of 2020.

On Wednesday, the IHS Markit will release the Services PMI data for Germany, the euro area and later the US. The ADP Employment Change will be featured in the US economic docket as well. Moreover, investors will be keeping a close eye on the Georgia election results, which are expected to be announced Wednesday morning.

Technical levels to consider