EUR/USD rebounds from 1.1300 area again, remains within recent ranges amid low year-end liquiditiy By Frank_Macro EURUSD ECB Fed
EUR/USD has rebounded from its 21DMA at 1.1300 for a second successive day, but remains within recent ranges pre-year end.
On the year, the pair looks on course to post a 7.0% decline, largely due to Fed/ECB policy divergence. On the final trading day of the year, a day marred by low liquidity/volumes given market closures across Europe and other parts of the world,has continued to find support at its 21-day moving average. The pair rebounded from a test of the 1.1300 level for a second session running and has, despite the recent closure of the few European markets that had actually been open on New Year’s Eve, is rebounding towards 1.1350.
EUR/USD is likely to remain subdued within recent ranges for the rest of what will be a very quiet session and looks on course to close out the month ever so slightly in the green. On the year, the pair looks on course to post a 7.0% decline. A blistering US economic and labour market recovery driven by a combination of massive fiscal and monetary stimulus has pushed inflation in the US to four-decade highs and triggered a hawkish pivot from the Fed.
Looking at EUR/USD from a technical perspective; some technicians might argue that the pair has formed an ascending triangle in December, with gains capped in the upper 1.1300s, whilst the pair posted ever higher lows throughout the month. That suggests a bullish breakout could be in the offing, though this may cut against the fundamentals. Many FX strategists expect dollar strength to persist in Q1 2022 as the Fed winds down its QE buying to zero and perhaps even kicks off its hiking cycle.
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