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EUR/USD Enjoys a Santa Rally – Breaks Higher

A week before Christmas Day, EUR/USD finally broke out of the narrow range and chose a direction: up. The pair crept above 1.3170 and eventually began a Santa Rally that sent it levels last seen in early May. Progress on the fiscal cliff, despite public blaming, seems to be the key. Where next?

EUR USD Breaks Higher December 18 2012
EUR USD Breaks Higher – click image to enlarge

Euro/dollar reached 1.3232 before ticking a bit lower. Significant resistance appears at 1.3290, followed by 1.34. The pair could stop beforehand.

For more levels and lines, see the EUR/USD forecast. Here is a daily chart showing the clear breakout:

EUR USD Santa Rally Daily Chart December 18 2012
EUR USD Santa Rally Daily Chart – Click image to enlarge

One of the reasons for the rally is progress in negotiations on the fiscal cliff: Both sides seemed to have made concessions and are getting closer.

However, the recent offer made by the White House was currently rejected by the Republicans, which presented a “Plan B” – minimal legislation to avoid higher taxes for Americans making up to 1 million dollars a year.

The White House also rejected this. Could these public rejection just serve as the last round of negotiations, made in order to conceal the concessions?

Both sides might want to show some toughness to their bases before presenting a deal which includes concessions.

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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.