somrat4030
Well-known member
Currency Trading Analysis Dec-31, 2021
The Pound US Dollar (GBP/USD) exchange rate is hovering above $1.35 today, its highest level since the start of November.
Amid thin trading conditions, the Pound is receiving support from cautious optimism that the impact on UK economic activity of soaring coronavirus cases will not be severe.
Pound (GBP) Strengthens on Cautious Optimism
The Pound (GBP) is ending 2021 on strong footing today on cautious optimism that the UK will avoid significant damage to economic activity from soaring Covid-19 infection rates.Although UK coronavirus cases hit another record high of 189,000 cases on Thursday and hospitalisations and deaths rose, news that the UK met its booster vaccination target provided optimism.
On the other hand, On the final trading day of the year, a day marred by low liquidity/volumes given market closures across Europe and other parts of the world,
EUR/USD has continued to find support at its 21-day moving average. The pair rebounded from a test of the 1.1300 level for a second session running and has, despite the recent closure of the few European markets that had actually been open on New Year's Eve, is rebounding towards 1.1350. The short-term bulls won't be getting too excited just yet given that the pair continues to trade within recent ranges and below the 1.1360-80ish monthly highs that have acted as a ceiling over the past few weeks.
EUR/USD is likely to remain subdued within recent ranges for the rest of what will be a very quiet session and looks on course to close out the month ever so slightly in the green. On the year, the pair looks on course to post a 7.0% decline. A blistering US economic and labour market recovery driven by a combination of massive fiscal and monetary stimulus has pushed inflation in the US to four-decade highs and triggered a hawkish pivot from the Fed.
Source: fxstreet.com/news
The economic calendar is empty today, so foreign exchange market traders will focus on general market sentiment.
It remains to be seen whether traders will be ready for significant moves in the last trading sessions of the year, although worries about the spread of coronavirus may provide some support to the safe-haven U.S. Dollar.
It should be noted that EUR/USD has been consolidating in December after a significant downside move which pushed it from 1.2250 in May to 1.1200 in November. While trading has been choppy in recent days, traders should expect more activity in the first weeks of 2022.
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