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EUR/USD Choppy Session Remains Intact – What’s Next?

Posted Friday, December 25, 2020 by
Arslan Butt • 2 min read

The EUR/USD pair closed at 1.21838, after placing a high of 1.22156, and a low of 1.21769. The currency pair EUR/USD surged during the early trading hours on Thursday, but failed to hold onto its gains, losing almost all of them, and ending the day on a flat movement, closing at the same level on which it started the day.

A Brexit deal was finally reached between the UK and EU on Christmas Eve, after years of negotiations. The deal consists of 2,000 pages, including annexes. After approval from both sides, it will enter into force. PM Boris Johnson praised the unprecedented Brexit deal that UK and EU negotiators reached on Thursday, just eight days before the transition period was due to end.

According to PM Boris Johnson, the UK has achieved a Canada-style trade deal worth 660 billion British Pounds, and regarding the agreement on fisheries—which was the main bone of contention in the negotiations—he said that the UK had taken full control over its waters. Mr. Johnson was excited, saying that the UK would be an independent coastal state with complete control over its waters. He showed his excitement, saying that Britain was now a truly independent nation. This was followed by the statements of EU Commission President Ursula von der Leyen, who also confirmed that a deal had been reached, and it was now time to leave Brexit behind.

The Brexit deal headlines proved good for the European currency and added to the upward direction of the EUR/USD pair in the early trading session. In the absence of significant macroeconomic data releases on Christmas Eve, the Brexit deal remained the main driver of the EUR/USD pair on Thursday.

However, the gains in the EUR/USD pair could not live for long, as the investors started closing their positions when a deal was finally reached between the EU and the UK. This still means that the UK will officially leave the EU on December 31, which will not be good for the European currency. All the gains that the currency pair EUR/USD collected in the early trading session were lost in the late trading session, when investors started closing their positions before a long weekend ahead. Furthermore, there was thin trading on Christmas Eve, and that also played an essential role in the consolidated move of the EUR/USD pair on Thursday.