December proved to be a challenging month for EUR/USD traders, testing emotional fortitude with a volatile track. The month kicked off with a hectic start, experiencing a late November selloff that led to a low of nearly 1.08300 on December 1st. The initial weeks saw choppy trading, especially for those with bullish sentiments, as additional lows were produced, testing day traders’ resilience.
December 8th marked a low point around 1.07250, challenging speculators further. However, a shift occurred on December 13th when the U.S. Federal Reserve adopted a less hawkish stance, indicating the end of interest rate hikes and potential rate cuts in spring 2024. This led to a surge in EUR/USD, briefly touching 1.10100 on December 14th.
Choppy trading continued until December 21st, marked by reversals. Another boost came when weaker-than-expected U.S. inflation data triggered more buying of EUR/USD, testing the 1.10400 ratio on December 22nd.
Entering January, EUR/USD remains close to late December marks. Despite reaching a high of nearly 1.11415 last week, headwinds emerged as the New Year’s holiday approached. Trading is expected to stay light early this week, with full volumes returning in the second week of January. Notably, EUR/USD’s ability to climb to mid-term highs and sustain values above 1.10000 is noteworthy, reflecting the weakening mid-term outlook for the USD.
As January unfolds, traders are advised to monitor support levels, particularly in the 1.10200 to 1.10100 range. Sustained values in this range may indicate potential buying momentum. The mid-term weakening of the USD suggests that the EUR/USD may be undervalued below the 1.10000 level. While challenges persist, particularly for day traders, cautious optimism prevails with an eye on January’s bullish wagering possibilities.