The euro has been moving steadily lower over the last 24 hours as some political news weighs on the currency and this has made the pair to move back towards the 1.1850 region where it trades as of this morning. There does not seem to be any major backlash in any of the currencies as yet, and this is quite understandable as we head to a period of holidays and a period of low volatility and liquidity.
EURUSD Moves Lower
The euro has been weighed down by a vote in Catalonia in Spain which would be crucial for the independence movement over there. There has been a lot of speculation about the need for the state to become independent from Spain and there has also been a lot of talk on whether independence is really needed. So, this vote is expected to put to rest all this speculation and it will probably decide which way the state wants to go. Of course, the vote in itself would not determine anything as Spain would like to continue to keep the state under control but it would help to atleast see what the people there are thinking.
Also, the confusion in Germany over the formation of a government continues with no deal being reached as yet. The elections there were completed a few months back and though it did catapult Merkel as the majority leader, she has not been able to cobble together a coalition as yet and this is also weighing on the Germany economy and the Eurozone as a whole. Due to these events, we are seeing some additional pressure on the euro over the last 24 hours which has caused it to move lower.
Looking ahead to the rest of the day, expect the weakness in the euro to continue as we do not have any major economic event from the Eurozone and only have the consumer goods data from the US. Do not expect the moves to be major in any sense as we wind down to the end of the year.
This article was originally posted on FX Empire