Investing.com - The euro held steady against the dollar on Monday despite choppy trading as increasingly impatient investors awaited guidance from Washington as to whether the White House and Congress will avoid a year-end fiscal cliff.
In U.S. trading on Monday, EUR/USD was trading up 0.01% at 1.3163, up from a session low of 1.3144, and off from a high of 1.3190.
The pair was likely to find support at 1.3067, Friday' low, and resistance at 1.3190, the earlier high.
At the end of this year, the Bush-era tax breaks and other benefits expire at the same time government spending cuts kick in, a combination known as a fiscal cliff that could contract the economy by 0.5% next year Congress fails to avoid it, according to Congressional Budget Office estimates.
Markets have been calm up to now though with no deal in sight, investors became edgy and ran to the safety of the dollar Monday, though reports that congressional Republicans may warm up to Democratic proposals for tax hikes on top U.S. earners sparked some demand for risk, which gave the euro room to rise.
Still, Democrats want tax breaks to expire on those earning USD250,000 a year, far below a reported Republican offer at a minimum USD1 million a year, a gap so wide that allowed for choppy trading that sent the pair in and out of positive territory on Monday.
Markets shrugged off data revealing that New York business activity came in weaker than expected.
The Empire State business conditions index dropped to -8.1 in December from a reading of -5.2 the previous month, missing market calls for a -1.0 reading.
Meanwhile in Europe, European Central Bank President Mario Draghi told the European Parliament’s Committee on Economic and Monetary Affairs that the eurozone economy will continue to face challenges so for some time to come, which cut into the single currency's gains against the greenback.
The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.18% at 0.8124, and EUR/JPY trading up 0.34% at 110.27.
On Tuesday, the U.S. is to produce government data on the current account balance.
In U.S. trading on Monday, EUR/USD was trading up 0.01% at 1.3163, up from a session low of 1.3144, and off from a high of 1.3190.
The pair was likely to find support at 1.3067, Friday' low, and resistance at 1.3190, the earlier high.
At the end of this year, the Bush-era tax breaks and other benefits expire at the same time government spending cuts kick in, a combination known as a fiscal cliff that could contract the economy by 0.5% next year Congress fails to avoid it, according to Congressional Budget Office estimates.
Markets have been calm up to now though with no deal in sight, investors became edgy and ran to the safety of the dollar Monday, though reports that congressional Republicans may warm up to Democratic proposals for tax hikes on top U.S. earners sparked some demand for risk, which gave the euro room to rise.
Still, Democrats want tax breaks to expire on those earning USD250,000 a year, far below a reported Republican offer at a minimum USD1 million a year, a gap so wide that allowed for choppy trading that sent the pair in and out of positive territory on Monday.
Markets shrugged off data revealing that New York business activity came in weaker than expected.
The Empire State business conditions index dropped to -8.1 in December from a reading of -5.2 the previous month, missing market calls for a -1.0 reading.
Meanwhile in Europe, European Central Bank President Mario Draghi told the European Parliament’s Committee on Economic and Monetary Affairs that the eurozone economy will continue to face challenges so for some time to come, which cut into the single currency's gains against the greenback.
The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.18% at 0.8124, and EUR/JPY trading up 0.34% at 110.27.
On Tuesday, the U.S. is to produce government data on the current account balance.