In the last trading week of the year 2022, the performance of the exchange rate of the euro currency pair against the US dollar, EUR/USD, was positive. It closed trading stable around the resistance 1.0713, but this does not mean that the euro was strong throughout the year. The dollar remained the strongest with the support of a strong tightening path from the Federal Reserve to contain the standard US inflation.
In today's trading session, a strong calm is expected in the performance of the EUR/USD price, in light of the market holiday on the occasion of the start of the new year 2023.
The EUR/USD currency pair is trading affected by the announcement of the rise in US Initial Jobless Claims for the week ending December 23 to 225 thousand from the previous week, which was equivalent to 216 thousand. Continuing claims for the period also increased slightly to 1.71 million compared to 1.669 million in the previous week. Prior to that, the US housing price index for October missed the expected change (MoM) by 0.8% with a change of 0%, while the S&P/Case-Shiller house price indexes for October came in below forecasts (YoY) at 9.7. % with a change of 8.6%.
From the EU, November's M3 money supply outperformed expectations (yoy) at 4.1% with a change of 4.8%. This was a slight decrease from the previous period of 5.1%. On the other hand, the M3 money supply for the three months ended November 30 grew by 5.4% compared to a growth of 5.8% in the previous period. Elsewhere, Private Loans for the month matched the expected (yoy) change of 4.1%, down from 4.2% in the prior period.
In the first week of the year 2023... This trading week is considered slow, given the year-end holidays and the lack of liquidity in the markets. But things are about to change drastically as soon as next week, as it is full of important economic events capable of sparking extreme fluctuations.
Four events to mark on your calendar:
- FOMC Meeting Minutes
- ISM Purchasing Managers' Index for the manufacturing and service sectors.
- Readings of the consumer price index for the euro area
- The US jobs report
The trading week begins on Wednesday. Before this day, most banks are closed, so it's fair to assume that not much will happen in the financial markets. But starting Wednesday, traders get busy. One of the main events of the coming trading week is the FOMC meeting minutes. The minutes reveal what the FOMC members discussed at the last meeting. More precisely, investors will discover more details regarding the recent hike in US interest rates from the Fed in December.
What is the final price the FOMC members see for 2023?
ISM manufacturing and services PMIs are due, one on Wednesday, ahead of the FOMC meeting minutes, and the other on Friday. This time, PMIs are very important because they provide an idea of the state of the US economy. Most economists expect the US economy to enter a recession in the first half of the year, and purchasing managers' indices will tell investors if it has really begun.
Next Friday, euro traders are on alert. An estimate of the Core Consumer Price Index (CPI) is due on a yearly basis during the European session. Given the previous reading of 5% and the ECB's optimism rising increasingly high, it is time to see if inflation has peaked in Europe.
On the same day, an important and exciting event will take place. Every first Friday of the month, the US Non-Farm Payrolls data is released. It's one of the most important economic releases because of the huge amount of information that comes with it, like the unemployment rate or average hourly earnings. In short, in just three days, the next trading week is ready to start with strong moves. As a result, forex traders should prepare for increased volatility.
Euro predictions against the dollar today:
- On the near term, and according to the performance on the hourly chart, it appears that the EUR/USD is trading within a bullish channel formation.
- This indicates a significant short-term bullish momentum in market sentiment.
- Therefore, the bulls will be looking to extend the current series of gains towards 1.0679 or higher to 1.0698.
- On the other hand, the bears will target a potential pullback around 1.0646 or below at 1.0626 support.
On the long term, and according to the performance on the daily chart, it appears that the EUR/USD is also trading within the formation of an ascending channel. This indicates a significant bullish momentum in the long-term market sentiment. Therefore, the bulls will target the long-term profit at around 1.0739 or higher at 1.0811. On the other hand, the bears will target a potential reverse profit at around 1.0586 or lower at 1.0503.
Ready to trade our Forex daily analysis and predictions? Here a list of regulated forex brokers to choose from.
