For the third day in a row, the Euro is seeing some unexpected volatility, as there is no significant fundamental news to drive prices, and liquidity is low for the holiday week. The Euro is down fifty points against the US Dollar in today’s forex trading following yesterday’s swings, when EURUSD saw an eighty point range despite only closing about twelve points higher than the open.
We saw a few economic releases in today’s European session. French gross domestic product only rose 0.1% in the final estimate for the third quarter, coming in lower than a previous estimate for 0.2% growth. In Italy, producer prices dropped 0.1% in November. Neither release had significant impact on trading.
The major story affecting currency trading is the looming US fiscal cliff. President Obama will meet with congressional leaders today, and the House of Representatives will continue to work on a possible compromise in an unusual Sunday session.
Also today, Germany’s Bundestag President Lammert said the aid to Greece is within the parliament’s framework. In China, the PBOC said the Chinese economy is stable and the price situation is basically stable.
Furthermore, the Yen continued to weaken against the US Dollar overnight, as weaker Japanese economic data made a better case for further stimulus. In the European session, Finance Minister Aso said the Japanese government will outline stimulus before the next BoJ meeting.
The Euro is currently trading slightly below 1.3200 against the US Dollar. Support could be provided by a previous resistance around 1.3158, and resistance could be provided by the recent 8-month high of 1.3308.
EURUSD Daily: December 28, 2012
--- Written by Benjamin Spier, DailyFX Research