With the Fiscal Cliff clock still ticking down, the Euro has continued to gain ground against the US dollar – trading just shy of the psychological 1.3100 round figure. And, with both political parties still at odds over entitlements and tax revenue, it seems as if the US dollar won’t have its day just yet.
Republican leaders continued to note their displeasure with White House initiatives to raise taxes on higher earners in the world’s largest economy as Democratic leaders rejected a recent proposal from House Speaker John Boehner. The new proposal includes an $800 billion tax rate hike, which has spurred ire from Boehner’s own Republican party. Although proposed as a reduction measure on the country’s estimated $16 trillion debt load, the plan is being billed as an American job killer by some Republican Senators.
Subsequently, US President Barack Obama remains confident that a deal is imminent and possible, noting that there are concessions on entitlement cuts that still can be made. However, those will unlikely be gained without the notion that “we’re going to have to have higher rates for the wealthiest”.
With US political parties still at war over the impending Fiscal Cliff, the Euro received additional support from comments made by European leaders ahead of a European finance minsters meeting in Brussels. European leaders voiced their continued support and optimism over the Greek bond buy back plan, with speculation increasing that German Chancellor will ultimately have to allow a write off of Greek debt in the intermediate future.
The optimistic sentiment has notably bolstered the single currency against the Swiss franc in the session. Breaking through a declining wedge pattern, the EURCHF pair is set to test resistance at 1.2183 September 17th session high after breaking to a 3-month high of 1.2144 in the session. Any near term correction will likely find support at 1.2079.
Source: FXTrek Intellicharts