EUR/USD: December is Euro’s best month by some distance – SocGen
24.11.2022, 15:56

EUR/USD: December is Euro’s best month by some distance – SocGen

The average monthly performance of the Euro against the Dollar for the last 20 years shows that the EUR/USD pair has usually risen in December, economists at  Société Générale report.

Danger of falling over on an icy sidewalk in January

“The last 20 Decembers have seen EUR/USD rising on 16 occasions, making it the Euro’s best month by some distance. Part of the reason may be that Euro sentiment has been negative more often than not, over that period. The average position in the FX markets market, for example, has been short Euros over that period. This means that there is frequently pressure to cover short Euro positions into the end of the year.”

“January is usually the Euro’s worst month, perhaps because the bearish sentiment doesn’t go away. This year, with a massive Dollar-bullish consensus taking EUR/USD lower, short-covering pressures may be even bigger than usual.”

“The danger is that the conditions for a January EUR/USD wobble are very easy to imagine. US consumers, still supported by strong balance sheets, don’t stop spending, and the Fed is forced to remain hawkish in the New Year. Winter arrives in Europe and concerns about energy supplies grow. Russian missile attacks on Ukraine raise fears of a bloody stalemate. That kind of news after a strong Euro rebound is exactly the kind of icy sidewalk that even a careful currency strategist could fall over on!” 

 

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