EURUSD: short term potential
The US economy continues to be resilient to the macro measures imposed by the Fed during the previous years. Published data on Retail Sales for December show an increase of 0.6% on a monthly basis, which was higher from forecasted 0.4%. Released data on building permits preliminary for December were 1.495M, a bit higher from forecasted 1.48M. This represents a 1.9% increase compared to the previous month. Michigan Consumer Sentiment preliminary for January reached the level of 78.8, a way higher from market estimation of 70.
Although Germany`s revised yearly GDP growth for 2023 was previously standing at 1.8%, still, the final data show that the most significant EU economy ended the yearly economic output with a minus 0.3% compared to the same period of last year. Also published inflation data for Germany shows that the inflation in December reached a modest 0.1%, bringing the inflation figure to 3.7% on a yearly basis. On a positive side was also that the ZEW Economic Sentiment Index for Germany in January reached the level of 15.2, higher from estimated 12.0, while the same indicator for the Euro Zone in January is standing at level of 22.7, again above estimated 21.9. Published inflation data for the Euro Zone show a modest 0.2% on a monthly basis in December and 2.9% on a yearly basis, which was fully in line with market estimates. The EU`s core inflation continues to be elevated with 3.4% in December.
During the previous week, USD was strongly supported by the optimistic economic data, where the currency pair moved from the level of 1.0955 down to 1.0865 at Tuesday`s trading session. The lowest level reached was 1.0849. The pair found support at the MA200 line. The RSI headed toward the oversold side, but was shortly stopped around the level of 45. However, there is still no indication that the market is ready for a move back above the level of 50 and toward the overbought side. Moving average of 50 days continues to diverge from its MA200 counterpart, with no indication that the potential cross is in store in the coming period.
The week ahead has several important economic data which will be posted, and will shape the market sentiment over the eurusd pair level. In addition, there is also an ECB rate decision scheduled for the week ahead, with no expectation that any change in rate level will occur. The spotlight would be on the US GDP growth rate for Q4 and PCE Price Index for December, which will have a major impact on the market sentiment. As per current charts, some volatility should be expected for the eurusd pair, but to the upside, after the pair finish testing the 1.08 support line. There is a relatively higher probability for 1.09 to be the next level of the currency pair in the week ahead.
Important news to watch during the week ahead are:
Euro: HCOB Manufacturing PMI Flash for January for Germany, Ifo Business Climate for Germany for January, ECB Interest Rate Decision, GFK Consumer Confidence for February.
USD: Durable Goods Orders for December, GDP Growth Rate for Q4, PCE Price Index for December.
Although Germany`s revised yearly GDP growth for 2023 was previously standing at 1.8%, still, the final data show that the most significant EU economy ended the yearly economic output with a minus 0.3% compared to the same period of last year. Also published inflation data for Germany shows that the inflation in December reached a modest 0.1%, bringing the inflation figure to 3.7% on a yearly basis. On a positive side was also that the ZEW Economic Sentiment Index for Germany in January reached the level of 15.2, higher from estimated 12.0, while the same indicator for the Euro Zone in January is standing at level of 22.7, again above estimated 21.9. Published inflation data for the Euro Zone show a modest 0.2% on a monthly basis in December and 2.9% on a yearly basis, which was fully in line with market estimates. The EU`s core inflation continues to be elevated with 3.4% in December.
During the previous week, USD was strongly supported by the optimistic economic data, where the currency pair moved from the level of 1.0955 down to 1.0865 at Tuesday`s trading session. The lowest level reached was 1.0849. The pair found support at the MA200 line. The RSI headed toward the oversold side, but was shortly stopped around the level of 45. However, there is still no indication that the market is ready for a move back above the level of 50 and toward the overbought side. Moving average of 50 days continues to diverge from its MA200 counterpart, with no indication that the potential cross is in store in the coming period.
The week ahead has several important economic data which will be posted, and will shape the market sentiment over the eurusd pair level. In addition, there is also an ECB rate decision scheduled for the week ahead, with no expectation that any change in rate level will occur. The spotlight would be on the US GDP growth rate for Q4 and PCE Price Index for December, which will have a major impact on the market sentiment. As per current charts, some volatility should be expected for the eurusd pair, but to the upside, after the pair finish testing the 1.08 support line. There is a relatively higher probability for 1.09 to be the next level of the currency pair in the week ahead.
Important news to watch during the week ahead are:
Euro: HCOB Manufacturing PMI Flash for January for Germany, Ifo Business Climate for Germany for January, ECB Interest Rate Decision, GFK Consumer Confidence for February.
USD: Durable Goods Orders for December, GDP Growth Rate for Q4, PCE Price Index for December.
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