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During Thursday's European open trade article, we raised the question about what were the current market conditions driving prices, in particular EUR/USD, which continues stubbornly impetuous to break 1.30.

Were they being the result of a real recovery in risk sentiment or simply being driven on a headline-by-headline basis? After Thursday's U.S. fiscal-induced swings, where risk was buffeted by pessimistic comments on the U.S. fiscal negotiations, the noise - unattractive for retail traders - seems to be the norm that will dictate the day to day market behavior for the time being.

As Mel Knox, analyst at FXstreet.com, notes: "Optimism over the U.S. budget talks is fading somewhat as market participants digest downbeat statements from House Speaker John Boehner on the ongoing fiscal cliff negotiations. In a news conference Thursday, Boehner said that 'no substantive progress' had been made over the last two weeks in the negotiations between the Obama White House and the House GOP leadership."

According to Kathy Lien, Co-Founder at BK Asset Management: "Washington is driving us nuts and reminds us of the days when EUR/USD seesawed on sovereign debt headlines. Conflicting messages from lawmakers have left investors completely confused. Are we getting closer to a deal to avert the Fiscal Cliff or not? According to House Speaker Boehner, there is 'no substantive progress in fiscal cliff talks' but according to New York Senator Charles Schumer, 'progress is happening behind the scenes.'"

Will it be long until we leave behind erratic conditions and well defined ranges in major currency pairs such as the EUR/USD? The widely held view seems to be that as long as Republicans and Democrats fail to find a compromise on the U.S. fiscal cliff, the name of the game will continue to be finding good entry levels from familiar range edges.

Sean Lee, Founder at FXWW, thinks that "while the prospect of a double-top now at 1.3005/10 in EUR/USD will have the bears salivating, the more likely outcome is continued range trading, with edges to watch on the day at 1.2945/1.3005" he said.

Kathy goes on saying that until premeditated political games by Republicans and Democrats are over and U.S. lawmakers start working on a real solution, "this is bad news for the market and risk", adding that "while currencies were able to rally on Thursday, further gains are unlikely as traders find themselves caught in the middle of Washington's war of words."

Valeria Bednarik, currency strategist at FXstreet.com, remains constructive in the euro, despite the initial panic selling which draw the shared currency off its 1.3000 high during the comments from Republican Speaker John Boehner. Valeria points at the resilience of the euro to recover its initial fall to 1.2944, where buyers defended the area, as an indication that if renewed attempts to approach 1.30 are seen, "a break higher will likely succeed with 1.3080 then at sight."

Analysts at UBS share Valeria's bullish views, and despite the bank remains ultra-bullish the U.S. dollar on mid and long timeframes, for the short-term, they expect 1.30 to break soon. UBS adds that Thursday's U.S. Q3 GDP growth - in line with expectations - "confirms stable growth and is therefore supportive for our EURUSD upside forecast."

Source: EUR/USD Stubbornly Impetuous To Break 1.30, Will U.S. Fiscal Noise Let It Happen?