EUR/USD Forecast Dec. 25-29 2017

EUR/USD traded higher in the last week before the holidays. Will it continue higher in the last week of 2017? We have some inflation figures just before the New Year. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.

The final read of inflation for November did not move the needle: core inflation is still stuck at 0.9%. This weighed on the euro in the initial publication but does not have any effect now. Consumer confidence continues rising in the euro-zone and French consumers bought more. Only Germany’s IFO business climate fell slightly short of projections but still looks robust. Data in the US was mixed and the tax cuts that Trump signed into law were already priced in. It seemed that dollar bulls took profits ahead of Christmas.

Updates:

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:

ECB Economic Bulletin: Thursday, 9:00. The European Central Bank publishes data that it uses in its rate decision, providing further insights about the state of the euro-zone economies.

German CPI: Friday, during the European morning with the final release coming at 13:00. Prices in Europe’s third-largest economy rose by 0.3% in November and its early publication will shape the numbers for all the euro-zone. Draghi’s dovishness is based on poor inflation in the euro-zone. We’ll now get an early look while liquidity is super-low just ahead of the New Years’ Party.

Spanish Flash CPI: Friday, 8:00. The fourth-largest economy in the euro-zone saw a bump up in inflation back in November, with 1.7% y/y. A slide back to 1.5% is on the cards in the first release for December.

Monetary data: Friday, 9:00. M3 Money Supply, or the amount of money in circulation, stood at a stable annual growth rate of 5% y/y. A small drop to 4.9% is on the cards. Growth in private loans stood at 2.8% and is now predicted to pick up to 2.8%. In theory, a higher velocity of money implies higher inflation in the future.