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Euro, Pound rally on light volume, Yen struggles

Publish Date27/12/2012 11:16:14 AM

Last Update27/12/2012 12:38:13 PM

Amid thin volume holiday trading, the U.S. dollar traded lower against its major counterparts, in anticipation for meetings between Obama and Congress, in attempt to grasp a last-minute deal on fiscal cliff.

During last weekend, Obama has downplayed the chances of a major agreement that would result in a solid near term solution for the “cliff”, as he asked policy makers for compromise and a kick-the-can-down-the-road deal to avoid the deadline.

Meanwhile, Treasury Secretary Timothy Geithner notified Congress that the U.S. is going to hit the debt ceiling on New Year`s Eve, in a written letter on Wednesday.

We may see this “temporarily solution” to avoid the cliff, however that would not be positive for markets over the short term.

The euro is trading noticeably higher against greenback, recorded an intraday high at 1.3275; the pair should find resistance near the previous highs starting at 1.3295 and 1.3307, while intraday support levels at 1.3250 and 1.3215.

The British pound rallied as well, printing an intraday high at 1.6195 and currently pushing higher. The pair could find resistance at 1.6205 and 1.6235 today, while key support level to watch at 1.6170-1.6165.

The Japanese yen remains under strong pressure across the board, the USDJPY is trading at multi-month highs, and above the major long term resistance 85.50.

Holding above this resistance over weekly closing basis signals further weakness and a major trend change, over the near term, 84.00-84.20 should form a floor for price action for this rally to remain sustainable.

The economic calendar is relatively light today, however Key events on the macroeconomic front are U.S. jobless claims, consumer confidence and new home sales, we expect the number to result in sharp volatility amid low volume levels. 


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