Euro/dollar, the world’s most popular currency pair, has suffered long spells of low volatility during 2017. Yet in the final week, as many traders are on holiday, it is making a remarkable move to the upside, rising on natural flows, something we haven’t seen for quite some time.
The pair is trading at 1.1982 at the time of writing, adding 40 pips in the final trading day of the year after gradually moving higher early in the week. The round number of 1.20 is very close. Should we have a breakout, the next level to watch is the 2017 high of 1.2090, which still seems far at the moment.
We did have some economic data released from the euro-zone today: Spanish CPI missed expectations with 1.2% y/y. Initial inflation figures from Germany’s states show lower y/y inflation figures. M3 Money Supply is up 4.9% as predicted while private loans also met predictions with 2.8% y/y.
As you can see, the data does not really support the gains. So what is going on? Here are three reasons for the rise:
Where will EUR/USD go in 2018? It is hard to say, with political uncertainty around the Italian elections, US politics, the potential end of QE in Europe and the unknown quantity of rate hikes in the US.
More: EURUSD, Dax and USDJPY Elliot Wave Analysis updates
Here is the one-hour chart: