The performance of the exchange rate of the euro currency pair against the US dollar, EUR/USD, remained in a neutral position last week. The bears tried to pounce on the performance by breaking the support level 1.0600, reaching the support level 1.0573. It closed the week’s trading around the level of 1.0615. This week the performance will be in very limited ranges that are characterized by volatility amid a holiday Christmas markets.
According to the economic analysis, the EUR/USD is trading affected by the results of the US economic data, as the US Durable Goods Orders for November missed the expected change of -0.6% with a change of -2.1%. On the other hand, non-defense capital goods orders from aircraft outperformed the expected change of 0% with a change of 0.2%, while the durable goods numbers previously in transportation beat the 0% estimate with a change of 0.2%.
Personal income for the month of November outperformed the expected change (MoM) by 0.2% with a change of 0.4% recorded, while personal spending for the period lost 0.2% with a change of 0.1% recorded. On the other hand, Michigan Consumer Confidence for December beat forecasts of 59.1 with a reading of 59.7, while US New Home Sales for November beat expectations (MoM) of 0.6M with a tally of 0.64M.
In general, inflation in the United States of America continued to decline until the end of 2022 and expectations about future increases have receded, raising hopes that the worst bout of price pressures in a generation has finally passed. The Fed's preferred inflation measures cooled in November, including a key annual measure that posted its smallest increase in more than a year, according to US Commerce Department data released Friday. A University of Michigan survey showed that inflation expectations for the coming year for consumers fell this month to the lowest level since June 2021.
However, wages are still escalating far too quickly for the Fed's liking. As the US central bank approaches the end of its interest rate hike cycle, the data suggests that borrowing costs will remain high for a long time until policymakers become more confident that price pressures are on a sustained downward trend. Inflation-adjusted consumer spending was flat in November, but officials will want to see more than a month's worth of data to indicate demand has softened significantly.
Technical expectations for the EUR/USD pair this week:
- It appears that the EUR/USD is trading within a bullish channel formation.
- This indicates a significant short-term bullish bias in market sentiment.
- Therefore, the bulls will be looking to extend the current gains towards 1.0641 or higher to 1.0658.
- On the other hand, the bears will target pullback profits around 1.0611 or below at support 1.0593.
On the long run, and according to the performance on the daily chart, it appears that the EUR/USD is trading within a bullish channel formation. This again shows that the market is going through a long-term bullish slope. Therefore, the bulls will target long-term profits at around 1.0690 or higher at 1.0774. On the other hand, the bears will target a potential reverse profit at around 1.0542 or below at 1.0455 support.
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