EUR/USD: 1.3225The Euro, having done little for much of the session, moved higher on continued hope of a positive outcome over the fiscal cliff negotiations and triggered stops once 1.3190 was taken out, moving quickly on to 1.3238. Both Boehner and Obama have made encouraging noises today with regards to the talks and the equity markets continue to rally strongly in anticipation of a deal before the 31 Dec deadline. Let's hope that there is no last minute hitch. If there is, the first week in January is going to look pretty ugly!
Elsewhere today, S+P has re-rated Greece's credit rating back up to B- from the previous "selective default" with a stable outlook following the latest bailout package being successfully negotiated.
Technically we have currently come to a halt just ahead of the minor 1.3240 resistance. If/when this is overcome, look for a run towards 1.3283 (1 May high), above which, things could begin to accelerate somewhat with a move towards the 27 March high at 1.3385 and potentially to the 24 Feb high at 1.3486. The indicators are certainly suggesting that the topside remains the path of least resistance although the stochastics and RSI's are at overbought extremes so I think progress, if seen, will be slow and choppy. On top of this with interest now rapidly diminishing, we are going to see some nasty spikes in either direction. For those who still need to be involved, I would be looking for levels to buy dips, but with tight stops in place. Even better, be square!
On the downside, back below 1.3200 would see bids at 1.3185 and then at the rising trendline at 1.3155 ahead of the Fibo support at 1.3096 (23.6% of 1.2660/1.3238).
Today we have the German IFO as the main point of focus out of Europe and it will again be the fiscal cliff that decides where the US session will head. With the increasing lack of participation in the markets, I would begin to think about pulling stumps today or tomorrow and would avoid Friday/Monday altogether.
FX Charts will be packing up writing the full daily report from Friday and will resume on Monday 21 January. In the meantime an abbreviated daily summary will be sent out by email and placed on the website each morning from Jan 2.
Economic data highlights will include:
German IFO
