Image Source: Pixabay

On Friday, the EUR/USD remained steady, poised to finish the week with gains of 0.39%, trade subsided capped by the 1.1650 figure as traders eyed the Federal Reserve’s decision next week.

Euro holds gains; US inflation and sentiment data shape market outlook

Economic data boosted the US Dollar, which trimmed some of its previous losses against the Euro. Inflation data in the US was mostly aligned with estimates, while Consumer Sentiment revealed by the University of Michigan (UoM) showed signs of improvement.

In the Eurozone, growth figures for the bloc showed the economy’s resilience with monthly data exceeding forecast. European Central Bank (ECB) Francois Villeroy said that the current position of the central bank’s policy doesn’t mean a comfortable position. He added that downside risks to inflation are more significant than the upside.

In the meantime, the lack of resolution of the Russia-Ukraine conflict, keeps the Euro pressured, even though news headlines revealed some progress in the meetings between the Kremlin and the White House, and Kyiv with Washington.

Daily market movers: US Dollar trimming losses, weighed on the Euro

• The Core Personal Consumption Expenditures (PCE) Price Index — the Fed’s favorite inflation gauge — hit 0.2% MoM in September, matching both last months and estimates. On a yearly basis, core PCE dipped from 2.9% to 2.8%, aligned with forecasts.
• The University of Michigan Consumer Sentiment index for December improved, with the index peaking forecasts of 52.0, came at 53.3 above November’s final reading of 51.1. Inflation expectations moderated, with one-year expectations falling from 4.5% to 4.1%, while five-year expectations slipped from 3.4% to 3.2%, signaling a further easing in longer-term price concerns among households.
• Despite the backdrop favors a moderately hawkish stance, money markets odds for a 25 basis points (bps) Fed rate cut next week remained unchanged at 84% revealed Capital Edge data.
• The US Dollar Index (DXY), which tracks the buck’s performance against six major currencies, ended with losses of 0.09% at 98.98.

(Click on image to enlarge)

Economic calendar - Source: FXStreet

Technical analysis: EUR/USD dips below 1.1650, eyes on 1.1600

EUR/USD holds steady around 1.1650 for a fourth session, forming a narrow consolidation band between this level and 1.1700. Buyers, unable to crack the latter, opened the door for some bearish momentum, as reflected by the Relative Strength Index (RSI), putting at risk a potential attempt to retest 1.1800 before challenging the year-to-date (YTD) high at 1.1918.

A daily close below 1.1650 opens the door to challenge the the 50-day Simple Moving Average (SMA) near 1.1609. Once surpasses, up next lies by the 20-day SMA at 1.1589, and then the 1.1500 psychological level.

(Click on image to enlarge)

EUR/USD daily chart

More By This Author: