Forex daily review

U.S. Dollar

With a dearth of news today and the likelihood of any resolution to the pending fiscal cliff issue coming from Washington being virtually nil, expect to see a range bound dollar.  The sole exception to this would be if positive news came from Europe regarding the Greek bailout, however, since most of the positive bias is already baked into the EUR/USD, any gains above the 1.3000 will most likely be seen as profit taking opportunities.

Euro: Spain Adds to EUR Woes

More uncertainty coming from the Euro Zone has snapped last week’s uptrend in the Euro.  Pro-independence groups in Spain have won regional elections, sparking uncertainty regarding the political climate in Spain and the possibility of the country postponing a request for a financial bailout.  This, combined with the current inability of the Euro Zone leaders to agree on a course of action for Greece has the Euro back in a weak position relative to major world currencies.  World economists speculate that even if a Greek deal is made today, the election results and uncertainty from Spain could continue to weaken the Euro currency.