EUR/USD pares gains after EU-UK trade deal, looks to close flat near 1.2180

The broad-based USD weakness allowed the EUR/USD pair to climb above 1.2200 during the European trading hours. However, the pair struggled to preserve its bullish momentum in the second half of the day and now remains on track to close virtually unchanged near 1.2180.

In the absence of significant macroeconomic data releases on Christmas Eve, Brexit headlines ramped up the market volatility. Reports of an imminent UK-EU trade deal fueled an impressive rally in the GBP/USD pair and made it difficult for the USD to attract investors.

After dropping to a daily low of 90.15, the US Dollar Index (DXY) staged a rebound during the American session and forced EUR/USD to erase its daily upside.

The confirmation of the EU-UK trade deal triggered a “sell the fact” market reaction and the DXY turned flat on the day 90.37.