Forex - EUR/USD falls as U.S. fiscal cliff talks hit fresh snag

Shutterstock photo - The dollar rose against the euro on Friday as investors shunned risk and opted for the safety of the U.S. currency after members of the House of Representatives rejected a proposal designed to avoid the fiscal cliff put forth by House Speaker John Boehner.

In U.S. trading on Friday, EUR/USD was trading down 0.57% at 1.3169, up from a session low of 1.3159, and off from a high of 1.3253.

The pair was likely to find support at 1.3144, Monday's low, and resistance at 1.3308, Wednesday's high.

Republicans in the U.S. House of Representatives canceled plans to vote on a budget proposal tabled by Speaker Boehner, himself a Republican, which called for tax hikes on incomes over USD1 million, well above a White House proposal calling for tax hikes on incomes topping USD400,000.

Rebellion in Boehner's own party spooked investors that the U.S. will fail to reach a budgetary deal, which will allow tax breaks to expire for all Americans in 2013 and deep cuts to government spending to kick in at the same time, a combination known as a fiscal cliff that could tip the country into a recession next year.

The news overshadowed otherwise positive data.

The U.S. Census Bureau reported earlier that core durable goods orders, which exclude transportation items, rose 1.6% in November, beating market expectations for a 0.2% decline though down slightly from a 1.9% increase the previous month.

Durable goods orders rose by 0.7% last month, outpacing consensus forecasts for a 0.2% rise though down from a 1.1% increase in October.

Meanwhile, a separate Commerce Department report revealed that personal spending in the U.S. rose by 0.4% in November, beating expectations for a 0.3% rise and far outpacing 0.1% fall the previous month.

Also in the U.S. earlier, Thomson Reuters/University of Michigan's consumer sentiment index slumped unexpectedly in December, possibly due to fears the U.S. will careen over the fiscal cliff.

The index dipped to 72.9 for December from of 74.5 the previous month, missing analysts' call for an improvement to 74.7 this month.

In Europe, the Gfk research group reported that its index of Germany's consumer climate fell to 5.6 in December from 5.8 in November.

Analysts had expected the index to improve to 5.9 this month.

The euro, meanwhile, was up against the pound and down against the yen, with EUR/GBP trading up 0.14% at 0.8147, and EUR/JPY trading down 0.82% at 110.84. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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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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