The euro is showing small losses in the Friday session. Currently, EUR/USD is trading at 1.2246, down 0.18% on the day. Despite today’s dip, it has been an excellent week for the pair, which is up 1.20 per cent.
German business morale rises
The week wrapped up with positive news out of Germany, as the Ifo Business Climate rose to 92.1 in December from an upwardly revised reading of 90.9 in November. The improvement in business morale was all the more impressive given that Germany is once again in a lockdown due to the Covid pandemic. After a rebound in Germany’s GDP in Q3, there are concerns that a prolonged lockdown will drag growth lower in Q4, possibly showing contraction. Inflation in Germany remains low, but the Producers Price Index eked out a small improvement in November, rising from 0.1% to 0.2%. Earlier in the week, German PMIs for November indicated that manufacturing continues to expand, while the services sector remains in contraction territory.
European Parliament sets Sunday deadline for Brexit
Brexit negotiations between London and Brussels are going down to the wire. With less than two weeks before the UK sails off from the EU, an agreement remains elusive. Deadlines have come and gone, but the European Parliament has set a drop-dead deadline of Sunday to announce a deal, saying that otherwise, it will be unable to approve a deal in time. Prime Minister Johnson and EU Commission President von der Leyen have both said that an agreement will be difficult to reach, but this could be last-minute posturing as the sides dig in their heels to obtain the best possible deal. Investors remain cautious but hopeful that a deal is imminent, and the announcement of a deal would likely boost the euro.
- EUR/USD faces resistance at 1.2299. Close by, there is resistance at 1.2328
- There is support at 1.2216, followed by a support line at 1.2162
- The pair was situated at the 10-day MA line earlier in the week but has moved higher
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