Over the last 24 years EURUSD has enjoyed a period of seasonal upside from now until the end of the year.

Over the last 24 years EURUSD has enjoyed a period of seasonal upside from now until the end of the year. Over nearly the last quarter of a century the EURUSD pair has gained on average of 1.59% and seen some years with outsized gains of over 10%. Part of the reason for these EURUSD gains is for accounting reasons as US parent companies push dollars into daughter companies for year-end tax accounts. This is part the reason for this period of USD weakness around the end of the year.

So, is this seasonal pattern worth pursuing this year? With President Elect Trump expected to run inflationary policies that draw heavily on tariffs imposed on China and other countries the base expectation is for more USD strength. However, this narrative is a consensus view and if Donald Trump surprises everyone with a more conciliatory view to world trade that could result in a swift rise in the EURUSD pair. Furthermore, the potential snap German election coming up in February 2025 is also weighing on the EURUSD. German Chancellor Olaf Scholz’s coalition fractured which was the catalyst for an agreement for early German elections now set for February 23. Scholz is now heading into a confidence vote on December 16, which will lead to the election if he loses. However, if Scholz wins the confidence vote then the EURUSD could experience a relief rally to end the year.

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Technically, we can see that parity at 1.000 is an obvious place to look for a potential EURUSD turnaround if it got down there. See chart below:

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Trade risks
The main risk is from any unexpected USD news, Trade tariff announcement, and Fed policy shifts with the Fed meeting mid December.

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