EUR/USD nudges above 1.1300 amid subdued holiday trading conditions

• EUR/USD has pushed above 1.1300 in recent trade and is up about 0.2%.
• Some have suggested that hawkish commentary from ECB’s Kazimir earlier in the session is lifting the euro.
• FX markets are very much in “holiday mode” now, given the proximity to Christmas and New Years' celebrations.

EUR/USD has nudged above the 1.1300 level in recent trade, with the pair now up about 0.2% on the session. The recent push higher marks a decent effort by the pair to break away from its 21-day moving average, which trades in the 1.1280s and had been acting as a magnet to the price action since Monday. Some are suggesting that some hawkish commentary from ECB governing council member and Slovakian central bank head Peter Kazimir, who joined a throng of other hawkish leaning ECB policymakers in warning about upside risks to the ECB’s inflation forecasts, is helping the euro marginally on Wednesday and that could well be the case.

Traders would do well not to read too much into recent moves, or extrapolate too much. FX markets are very much in “holiday mode” now, given the proximity to Christmas and New Years celebrations, which means a lot of market participants are taking time off. Liquidity conditions are thus thin, and markets are expected to trade with a lack of conviction. This can become a self-fulfilling prophecy, with the market participants that are still present opting not to place big bets until activity picks up in the new year. For EUR/USD, that means a break out of recent 1.1250.1.1350ish ranges is unlikely.

Looking ahead, the third estimate of US Q3 GDP data is scheduled for release at 1330GMT, but given how backward-looking it is, shouldn’t garner too much attention. The release of the US Conference Board’s Consumer Confidence survey at 1500GMT is likely to garner more attention given it is much timelier and will be a guage of how badly the arrival of Omicron on US shores has dented sentiment. Still, given holiday conditions, the impact on EUR/USD is likely to be minimal. The latest news on Omicron itself is likely to remain the main market driver as nations across Europe take steps to reimpose varying degrees of restrictions in an attempt to curb transmission.