EUR/USD Dec. 29 – Returns to Range After Wild Ride

EUR/USD is back to the same trading range after making a wild move yesterday on thin volume. Will we see another sharp move before the new year? Here’s a quick update on technicals, fundamentals and community trends.

Euro/Dollar back in the range.

EUR/USD Technicals

• Asian session:  EUR/USD had a quiet session, bouncing off 1.3080..
• Current Range between 1.3080 to 1.3180
• Further levels in both directions: Below  1.3080,  1.30, 1.2920, 1.2722, 1.2587.  Above 1.3180, 1.3267, 1.3334, 1.3576,  1.37, 1.3786,  1.3950 and 1.4030.
• 1.3080 important support below
• 1.3440 is important resistance above and remains as such after a breakout attempt failed.

EUR/USD Fundamentals –

• 9:00 European M3 Money Supply. Exp. +1.6%.
• German Prelim CPI. Exp. 0.8%.

* All times are GMT.

For more events later in the week, see the EUR/USD forecast.

EUR/USD Sentiment

• The lack of liquidity continues to characterize trading, as currencies can rock in wild ranges, without significant forces to stop them.
• The ECB didn’t manage to drain the excessive cash it created by buying bonds. This means that there’s excessive money in the markets, and this could have pushed the Euro higher. The effect is probably temporary, as banks prefer staying more liquid before the new year.
• No fresh bad news concerning the European debt crisis also help the Euro.
• The Chinese rate hike risks global growth and triggered risk aversive trading, but at least for now, the effect is fading out.
• France is danger of suffering a credit rating downgrade – France is Europe’s second largest economy. A downgrade or a warning will send the Euro way down.
• Spanish bond yields have stabilized at high levels, around 5.50%. This stability is with us for over a week.
• Trading volume isn’t as thin as yesterday, but it’s still low in comparison to regular days during the year.
• Currensee Community: 50% are long , 50% are short. These are 1255  open positions in real accounts trading this pair at the moment.