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Dollar Rally Stops After Confidence Disappoints

US Conference Board consumer confidence indicator fell from 54.1 to 52.5, falling short of expectations of a rise to 56.2 points. EUR/USD is stable after this release. It made significant falls beforehand.

Last month, this important US indicator unexpectedly jumped above the 52 area that it was expected to hit, but returned to this level.

EUR/USD had a roller coaster day, making a very sharp move higher, even marginally passing the 1.3267 line before making a sharp reversal and falling all the way down to 1.3140.

Also other currencies gained against the US dollar. Here’s a possible explanation: the lack of news of any kind, and especially the absence of bad news from Europe regarding the debt crisis, helped many currencies enjoy the risk rally and rise.

The Australian dollar definitely enjoyed this – as the news about the Chinese rate hike faded away, the Aussie continued higher, and broke above the 1.0080 level. It’s now not too far from the multi-year highs.

But it’s mostly the thin markets that enable these sharp moves. There aren’t enough stops in any direction, so a few orders send currencies shooting in both directions. Trading will return to normal only on January 4th.

For more technical levels and events moving the Euro, see the EUR/USD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.