There is a seasonal bias that is quite compelling for EUR/USD in December – 14 Decembers from the last 20 years have seen a higher EUR/USD with an average gain over those 14 occasions an impressive 2.6%. If we exclude December 2008 (+10.1%), the average gain over the other 13 occasions was still substantial at 2.0%. Furthermore in 8 of the 11 occasions when EUR/USD moved higher in November it was followed by a December gain.

But this doesn’t mean we can ignore the fundamentals and certainly the prospects of that seasonal bias being evident in December 2023 would be helped if we began to see US economic activity slow. Without that, investor’s optimism over the recent inflation declines may not persist.