Following the cancellation of the US House of Representatives vote on ‘Plan B’, which would have raised taxes on some wealthy Americans, fiscal cliff worries have grown and a risk aversion can be seen across markets in today’s trading.
However, following a sudden drop to 1.3190, the Euro has managed to reverse about half of the early session sixty point loss against the US Dollar. The only piece of news that might have been responsible for the Euro uptick were the comments from EC Vice President Olli Rehn. Rehn said that further French Budget cuts aren’t essential, according to Le Monde. Euro climbed to 1.3230 following the comments.
Also in France, PM Hollande said unemployment will continue to rise, but there is no recession. French consumer confidence was reported at 89.0 in December, up from November’s 88.0 consumer confidence.
In Germany, consumer confidence dropped to a yearly low of 5.6. The German Finance Ministry reported today in a monthly report that it expects a rebound after the first quarter of next year, and that figures show an unfavorable start to Q4. Neither release had significant effect on currency trading.
In the UK, economic growth in Q3 was revised lower in a final estimate and public debt for November was higher than expected. However, the Sterling did not sustain any losses, possibly because of an unwinding of declines that followed the overnight US news.
Euro is currently trading slightly above 1.3200 in currency markets. The pair might next see resistance by an 8-month high set at 1.3308, and support could be provided by the former resistance around 1.3158.
EURUSD Daily: December 21, 2012
--- Written by Benjamin Spier, DailyFX Research