The typical month-to-month efficiency of the Euro towards the Greenback for the final 20 years exhibits that the EUR/USD pair has often risen in December, economists at Société Générale report.
Hazard of falling over on an icy sidewalk in January
“The final 20 Decembers have seen EUR/USD rising on 16 events, making it the Euro’s greatest month by a ways. A part of the explanation could also be that Euro sentiment has been damaging as a rule, over that interval. The typical place within the FX markets market, for instance, has been brief Euros over that interval. Because of this there may be incessantly stress to cowl brief Euro positions into the tip of the yr.”
“January is often the Euro’s worst month, maybe as a result of the bearish sentiment doesn’t go away. This yr, with an enormous Greenback-bullish consensus taking EUR/USD decrease, short-covering pressures could also be even larger than normal.”
“The hazard is that the situations for a January EUR/USD wobble are very straightforward to think about. US customers, nonetheless supported by robust steadiness sheets, don’t cease spending, and the Fed is pressured to stay hawkish within the New 12 months. Winter arrives in Europe and issues about power provides develop. Russian missile assaults on Ukraine increase fears of a bloody stalemate. That sort of information after a robust Euro rebound is strictly the sort of icy sidewalk that even a cautious forex strategist may fall over on!”