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Forex - EUR/USD dips as markets await word on U.S. fiscal cliff

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Investing.com - The U.S. dollar rose against the euro on Monday as investors spent the last day of the year parked in the safe-haven greenback monitoring progress to avoid the year-end fiscal cliff, a USD600 billion combination of tax hikes and spending cuts due to take effect Jan. 1.

Failure in the U.S. Congress to agree on a fiscal framework could push the U.S. economy into a recession next year.

In U.S. trading on Monday, EUR/USD was trading down 0.18% at 1.3192, up from a session low of 1.3173, and off from a high of 1.3236.

The pair was likely to find support at 1.3159, the low from Dec. 21, and resistance at 1.3256, Friday's high.

Investors remained camped out in safe-haven dollar positions in afternoon trading on Monday to see if lawmakers were coming closer to striking a deal to avoid the fiscal cliff.

President Barack Obama on Monday said an agreement was in sight though stressed nothing had been finalized yet, which kept investors firmly parked in the dollar, a safe-haven asset popular during times of uncertainty.

Even if New Year's Day comes and goes without a deal, lawmakers can still work afterwards to reach an agreement, as changes to tax and spending policies will take a while to materialize, though uncertainty boosted the U.S. dollar's appeal in currency markets on Monday.

The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.66% at 0.8124, and EUR/JPY trading up 0.60% at 114.24.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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