In European trading, major currencies remained in positive territory, except for the Swiss franc. Topping the leaderboard was the New Zealand dollar (+0.85%), while the pound sterling (+0.80%) came in second place.
Cable pared all losses sustained on Monday (December 28). The price increased to 1.3615. The British currency capitalized on broad-based weakness in the US dollar and a pullback in the EURGBP cross. We believe the currency drew strength from reports that President of the European Commission Ursula von der Leyen and President of the European Council Charles Michel signed off on the EU-UK Trade and Cooperation at the headquarters of the European Council headquarters in Brussels.
In turn, the EURUSD pair came under pressure due to a decline in the EURGBP pair. The price dropped from 1.2295 to 1.2253 and retraced to 1.2289 amid overall depreciation of the dollar.
The US dollar fell to new multi-year lows amid increasing odds of additional financial aid stateside. For this reason, buyers of risk assets expect to see further depreciation of the dollar in 2021. Low liquidity amid the holiday lull has helped buyers push prices up on the back of thinner volumes than in the previous week. The target range for EURUSD still remains 1.2310-1.2330.