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Forex - EUR/USD extends gains as U.S. budget talks to resume

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Investing.com - The euro extended gains against the U.S. dollar in light trade on Thursday, as investors waited for key U.S. budget negotiations to resume later in the day.

EUR/USD hit 1.3280 during European afternoon trade, the pair's highest since December 20; the pair subsequently consolidated at 1.3275, rising 0.39%.

The pair was likely to find support at 1.3172, Wednesday's low and resistance at 1.3308, the high of December 19.

Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.

President Barack Obama was to end his vacation and return to Washington on Thursday in order to take part in talks to avert the crisis ahead of the year-end deadline. Both chambers of Congress are also due to return to work on Thursday.

Without a deal, the U.S. could fall back into recession and drag much of the world down with it.

In addition, U.S. Treasury Secretary Tim Geithner said Wednesday that the USD16.4 trillion debt ceiling limit will be hit on December 31. Geithner added that "accounting measures" will be taken to create "headroom" in order to delay a technical violation.

The temporary moves would create USD200 billion in "headroom," enough to last for approximately two months under normal circumstances.

The euro was also higher against the pound with EUR/GBP adding 0.26%, to hit 0.8215.

Later in the day, the U.S. was to publish its weekly government report on initial jobless claims, as well as data on new home sales and consumer confidence.

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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.


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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