Euro Rises Against US Dollar, Testing Key Resistance

The Euro pushed higher against the US Dollar overnight, testing as high as 1.4170 and set to challenge critical, multi-year support/resistance levels. The British Pound diverged from the single currency, losing its grip on the 1.47 mark. Switzerland’s KOF Leading Indicator and UK Housing Equity figures are on tap in European hours.

Key Overnight Developments

• Euro, British Pound Diverge Against the US Dollar

Critical Levels

The Euro pushed higher against the US Dollar overnight, testing as high as 1.4171 and then settling in a narrow range above 1.4140. It seems the bulls are determined for another run at key support-turned-resistance at an upward-sloping trend line that had guided EURUSD higher since 2002 and was broken to the downside in October. Still, our EURUSD Exchange Rate Forecast points to the likelihood of a bearish scenario through January.

The British Pound diverged from the single currency, losing its grip on the 1.47 mark late into the session and sinking to test below 1.4650.

Euro Session: What to Expect

Tumbling real estate values are expected to see the Bank of England’s Housing Equity Withdrawal measure fall -3.3 billion pounds in the third quarter, following the first negative reading in a decade in the three months through June. A negative figure means that Britons put 3.3 billion more into their homes (via mortgage payments, for example) than they were able to get back in borrowing against their value. Naturally, that’s 3.3 billion less that is available for consumption and investment, weighing on overall economic growth. House prices have fallen 10.2% through December since peaking in May according to Rightmove PLC, a firm listing for-sale properties online.

In Switzerland, the KOF Leading Indicator is expected to print negative for the second consecutive month in December, falling to the lowest in over 5 years. The metric is an index of six indicators of Swiss economic performance for the following six to nine months. The negative reading suggests the mountain nation will not see economic growth for much of the coming year.

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