Fiscal Cliff's "Wasted Week" Boosts EURUSD Off 2-Week Low

Speaking to reporters in front of the Capitol Building in Washington, House Speaker John Boehner dealt the US dollar a blow on the session. The hit was hard enough to propel the EURUSD higher off session lows at 1.2875 – or the low for the past 2 weeks. Incidentally, today’s dollar bearish comments counter earlier bullishness on the heels of a better than expected NFP figure.

“No Progress To Report”

Following the end of a contentious week on Fiscal Cliff negotiations, Republican John Boehner spoke out against President Obama’s “my way or the highway” style efforts that remain fixated on raising tax rates for the country’s highest earners. Additionally, the Republican leader noted that Democratic leaders had issued “reckless talk” in the beginning of the week, stating a willingness to go over the cliff.

As a result, the Republican leader announced “there’s no progress to report”.

However, in unfamiliar fashion, Boehner stated a willingness to entertain the idea of raising the top tax rate to between 35% and 39.6%. But, that the acceptance of the policy must be met with concessions to Republican Party demands. Those demands were rejected earlier in the week by the current administration as it included tightened eligibility of Medicare requirements and a reduction in itemized deductions rather than a full on increase in income tax rates.

All in all, today’s comments place focus on next week’s negotiations as the clock continues to tick down to the end of the year.

Technical Outlook

Although the medium term technical outlook for EURUSD remains bearish, the shorter term picture does allow for some upside. Seemingly establishing support at 1.2895, the EURUSD has bounced back towards resistance at 1.2950 38.2% fib resistance. A break above the figure would automatically place the 1.3000 psychological resistance into play.

EURUSDSource:  FXTrek Intellicharts
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