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Forex - EUR/USD lower as "fiscal cliff" looms

Published 12/31/2012, 02:23 AM
Updated 12/31/2012, 02:24 AM
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EUR/GBP
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Investing.com - The euro was lower against the U.S. dollar in light trade on Monday, as worries that U.S. lawmakers will be unable to agree on a way to avert a fiscal crisis weighed on market sentiment.

EUR/USD hit 1.3186 during late Asian trade, the session low; the pair subsequently consolidated at 1.3186, shedding 0.23%.

The pair was likely to find support at 1.3163, the low of December 16 and resistance at 1.3256, the high of December 28.

Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1 unless Democrats and Republicans agree how to cut the deficit.

U.S. President Barack Obama met with congressional leaders at the White House Friday afternoon, but both sides failed to reach an agreement ahead of the looming year-end deadline.

Senate Majority Leader Harry Reid said the Senate would resume sitting on Monday to continue discussions, but there were still significant differences between the two sides.

Without a deal, the U.S. could fall back into recession and drag much of the world down with it.

Elsewhere, the euro was fractionally lower against the pound with EUR/GBP edging down 0.09%, to hit 0.8171.

Trading volumes were expected to remain thin as many investors already closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.


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