EUR/USD off four-month tops, still bid above 1.1200
- US dollar index depressed near five-month lows amid trade hopes.
- EUR/USD unfazed by steepening of the US Treasury yield curve.
- Volatile moves likely on the table amid New Year Eve thin trading.
EUR/USD posts small gains in early European trading, extending the bullish consolidation phase on the 1.12 handle in the lead up to the New Year.
Dollar trades unwind and push EUR/USD higher
The main currency pair extends its winning streak into a fifth day on Tuesday, with the upside mainly driven by the reduced demand for the greenback across its main peers in the year-end trading.
The safe-haven US dollar meanders near five-month lows, as risk-on trades prevail amid US-China trade signing expected next month while year-end closing out of the dollar positions also adds to the weight on the buck across buck.
Moreover, improved US economic outlook, as indicated by the steepening of the US Treasury yield curve, also fails to impress the USD buyers and in turn supports the EUR/USD’s advance. US Treasury yield curve is steepest in over a year
On the EUR-side of the story, the signs of an economic turnaround in Germany combined with expectations of fiscal stimulus, as called by the ECB President Lagarde, underpins the single currency, as it trades 0.08% firmer near 1.1210 region vs. the greenback.
The spot reached fresh four-month highs of 1.1223 on Monday. The bulls now await the US CB Consumer Confidence data for fresh trading impetus, as most major European markets are closed today in observance of New Year's Eve.
EUR/USD Technical levels to consider