German Consumer Confidence Data Boosts EUR

The EUR/USD currency pair breached the resistance level 1.3500 this morning after the release of some encouraging sentiment data from Germany, but concerns about a potential US government shutdown have been preventing it from scaling last week’s highs.

EUR/USD September 25 2013Source: FXstreet
EUR/USD September 25 2013
Source: FXstreet

The deadline of September 30th, after which congressional approval for the US government to continue to spend money will be required, is fast approaching. In order to prevent a government shutdown, Congress needs to pass a “continuing resolution” to raise the debt ceiling, and so far US politicians appear to be deadlocked on the issue.

A failure to reach an agreement would send markets into a tailspin, although the dollar’s safe haven status would probably see it make gains against riskier currencies such as the euro if this transpired.

The euro was boosted by data showing that German consumer confidence had hit a six-year high, and now seems to be holding steady around the $1.3500 mark. This is still short of the peak of $1.3479 hit last week after the US Federal Reserve surprised markets with its decision to maintain its monetary stimulus programme.

Continued uncertainty over the Fed’s tapering plans, coupled with ECB President Mario Draghi’s statement yesterday about the possibility of the central bank providing more cheap long-term loans have been weighing on both currencies.