All trading involves risk. Losses can exceed deposits.

EUR/USD treads water

How do you value the strength of a currency that has so much political uncertainty hanging over it?

All trading involves risk. Losses can exceed deposits.

This is the question that many traders will be asking, as we are unlikely to get a resolution to continued discussions taking place between the two political powers in the US anytime soon.

We have seen a number of pieces of economic data released for the EU today, including trade balance figures for France and Germany. True to form the French figures are a little weaker, while the German data indicates a slight improvement for the region.

Across the pond, with the US government still on shutdown, the flow of economic data has stagnated and, without a reliable flow of information, analysis for this region has become difficult. Market action in the last 48 hours implies that currency traders have decided to hold their positions and await further clarification. This goes against the natural instinct of currencies which, as a 24-hour tradable product, is certainly not to stand still.

Those IG clients trading EUR/USD and other US dollar pairs should be conscious of the possibility of large corrective moves when things do clear up.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.