EUR/USD upside extends, now in the 1.1320s despite strong US GDP, Consumer Confidence numbers

• EUR/USD is up about 0.3% and trading in the 1.1320s, as technicians eye a move to last week’s 1.1360 highs.
• EUR/USD continues to push higher as FX markets adopt somewhat risk-on posture, though most majors remain within recent ranges.
• Stronger than expected US GDP and Consumer Confidence data was largely ignored.

EUR/USD is extending on earlier session gains and has now convincingly cleared its earlier weekly highs around 1.1304 and is pressing on into the 1.1320s. Despite a broadly subdued tone to trade in other asset classes (like equities and bonds), FX markets have adopted a somewhat more risk-on posture on Wednesday, though most major G10 pairs have not broken out of recent intra-day/week ranges.

That goes for EUR/USD too, though the pair is at weekly highs and now up about 0.3% on the day, it still trades well below last week’s 1.1360ish highs. Moreover, the pair continues to trade well within the 1.1240-1.1360ish trading range that has prevailed throughout the month thus far. Those seeking to play the range would likely see any push towards the middle/upper 1.1300s as an opportunity to add tentative short positions and ride the pair back under the 1.1300 handle.

Just as hawkish rhetoric from ECB members in the Wednesday European morning (ECB’s Peter Kazimir warned of upside inflation risks whilst Robert Holzmann outlined his “extreme” scenario for rate hikes in 2022) failed to impact markets, US data releases did too. The final estimate for US Q3 GDP was better than expected and revised higher to 2.3% form 2.1%. Meanwhile, the headline Conference Board Consumer Confidence index rose more than expected to 115.8 in December from 109.5, its highest levels since July.

The GDP numbers were ignored likely because, at this point, they are very backward-looking. Meanwhile, though it was nice to see US Consumer Confidence rise in December, any improvement is likely to be short-lived, with a wave of Omicron infections and associated higher levels of “pandemic fear” likely to weigh in January.