Forex: EUR/USD quiet in range; still no “Cliff” deal

FXstreet.com (San Francisco) - The US fiscal cliff remains the issue of the day, as a deal between lawmakers on Capitol Hill is still in negotiations, although after the January 1, 2013 deadline has come and gone. At the start of the week, markets reacted somewhat optimistically to President Obama's comments, saying that a deal was "in sight" to avert a fiscal disaster before the New Year, but as it stands today, U.S. House Republicans have opposed the Senate's budget bill (the Democratic bill). The opposition has lead to the House proposing amendments to the Senate bill would jeopardize the deal arranged by Vice President Joe Biden and Senate Minority Leader, Republican, Mitch McConnell. So, politics and the nation's inability to reach compromise has once again lead to self-inflicted wounds to the world's largest economy, and the nation is again at risk for another downgrade by ratings agencies.

On the first day of 2013, the EURUSD remain trading in a relatively quiet range, with only a downside break of 1.3150 needed to open the door to target lower levels. The 21-day EMA, today at 1.3120, is offered as dynamic support. Below there, 1.3050 and 1.2975 are next bearish targets - the 38.2% and 50% Fibonacci retracement levels of the latest daily run. The 1.3300 resistance level must first be overcame to stimulate more topside momentum, with a likely test offers to be next seen around 1.3380 (Mar27 high), then 1.3490 (50%, 1.4940/1.2040 decline).

EURUSD now exchanges at 1.3205.