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Forex News: Euro Retraces Gap Despite Looming Fiscal Cliff

Forex News: Euro Retraces Gap Despite Looming Fiscal Cliff

Benjamin Spier, Technical Strategist

Despite the likelihood of the US falling off the fiscal cliff growing with every passing day, risk correlated currencies are trading higher in today’s trading. EURUSD opened fifteen points lower than Friday’s close but still managed to climb 40 points over the course of the Monday session.

Over the weekend, Senator Joseph Lieberman said on CNN that he thinks it is likely that the US will go over the fiscal cliff. Lawmakers will reconvene on Thursday after the holiday break, and they have through the following Monday to come up with a plan to avert the fiscal cliff before the start of the new year. Yet despite the increased pessimism for a deal, there doesn’t seem to be a clear case of risk aversion in today’s markets, as European equities opened with mixed results and most risk correlated currencies are beating the Yen and US Dolalr.

There were no notable economic releases in today’s session, except the UK Hometrack Housing Survey which was 0.1% lower in December.

Additionally, the IMF and EU released their report on Greece tax reforms today. The report said that Greece hasn’t met five of the ten 6-month tax system overhaul targets. The report said Greece needs stronger enforcement of VAT collection and that a significant part of the 53 billion Euros of outstanding taxes can’t be collected and should be written off.

The Euro is currently trading above 1.3200 against the US Dollar in currency markets. Resistance might be seen by an eight month high near 1.3308. Support could be provided by a previous resistance near 1.3158.

Forex markets will close for Christmas today at 17:00 GMT and reopen on Wednesday at 06:00 GMT.

EURUSD Daily: December 24, 2012

Euro_Retraces_Gap_Despite_Looming_Fiscal_Cliff_body_eurusd_daily_chart.png, Forex News: Euro Retraces Gap Despite Looming Fiscal Cliff

--- Written by Benjamin Spier, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.