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EUR/USD update (14th Dec 2011, 04:00)

Overnight, ongoing scepticism of the weekend’s EU summit resolutions and a sense of hopelessness that the European crisis will drag on well into 2012 saw the euro breach key support levels and fall to its lowest level since January.

Investors’ hopes for a risk-infused rally into Christmas dissipated shortly after the summit, with volumes across the board falling dramatically as many traders have essentially ‘shut up shop’ for the year. Risk positions have been wound back and money is being parked in the relative safety of the USD and US treasuries. It is difficult to see this trend materially changing between now and the end of the year.

Having ended yesterday’s Australian session around the 1.32 mark, the euro lost favour during European trade and once it breached its technical support level of 1.3145 (the recent low of October 4), sellers moved in and sold it down to an overnight low of 1.3009. It recovered modestly to close at 1.3037. Upon reopening for Asian trade, the euro is little changed, continuing to move in the 1.3030s. Many currency strategists see the euro heading towards the 1.20 level, particularly if the ECB gets more involved and adopts some form of quantitative easing. 

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EUR/USD update (14th Dec 2011, 04:00)

Overnight, ongoing scepticism of the weekend’s EU summit resolutions and a sense of hopelessness that the European crisis will drag on well into 2012 saw the euro breach key support levels and fall to its lowest level since January.

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