EURUSD: Brexit news calls the shots in European session

The EURUSD pair traded slightly higher on Thursday, December 23, with the pair gaining 0.18% to 1.2183. The euro slipped to 1.2160, but rebounded swiftly, retracing to the intraday high at 1.2221 (+99 pips). The spike higher was attributable to a rally in sterling, which strengthened by 168 pips against the dollar to 1.3570. This weakened the US currency and paved the way for gains in other major currencies.

Great Britain reportedly made several "big concessions" in its trade talks with the EU. The EU and the UK are on the cusp of a trade deal and may sign off on it today. British Prime Minister Boris Johnson is expected to make an official speech during the European session. The EU member states will need to agree to provisional application of the deal on January 1 since there is not enough time for its ratification by the European Parliament.

All eyes were so riveted on Brexit that Trump’s veto of the defense spending bill nearly went unnoticed. Furthermore, US market participants are waiting for a decision on the “disgraceful” coronavirus relief package that Trump sent back to Congress for redrafting.

Today’s macro agenda (GMT+3)

• 16:30 Canada: construction permits (October)
• Christmas Eve (half-day trading session)

Current outlook

At the time of writing, the euro was trading at 1.2206. On December 24, US markets will be running on an abbreviated pre-Christmas schedule. Brexit still takes front and center stage for the FX market as traders await official announcements on the trade deal.

The press conference undoubtedly hype up a ‘great victory’ scored by both sides after months of haggling to propel the trade deal to the finish line. Then a due diligence commission will most likely be formed to check the legal aspects of the agreement and ensure that the interests of both parties are upheld.

Today’s economic calendar is blank. The price action is hovering near the balance line near the midpoint of the 1.2175-1.2245 range. Bottom line: breaking Brexit news will call the shots for EURUSD during the European trading session.