- EUR/USD is holding steady in thin markets to wrap up the trading year.
- The Euro is set for a 3% gain against the US Dollar for the year.
- US data continues to miss the mark as the economic outlook softens.
As we close out the last trading session of 2023, the EUR/USD is trading flat. The Euro (EUR) is set to close up 3% against the US Dollar (USD) for 2023, showing a strong rally from the year’s bottom bids in October. The EUR/USD is leaning into the bullish side as markets continue to sell off the Greenback in anticipation of rate cuts from the Federal Reserve (Fed) in 2024.
With meaningful Eurozone economic data absent until January 4, the US data docket needs to do the heavy lifting to round out the trading year.
Softening economic data from the US continues to bolster market risk appetite, as a weakening economic outlook increases the odds of an accelerated pace of rate hikes from the Fed in 2024. Investor expectations have run well ahead of the Fed’s own rate outlook for next year, which currently sees up to 75 basis points in rate cuts through the end of 2024.
As the 2023 trading year rounds the corner into 2024, the EUR/USD is set to head into the new year catching technical support from the 200-hour SMA just above the 1.1000 handle. Daily candlesticks tell a notably overbought story with the Euro pulling back from Thursday’s multi-month highs near 1.1150.
Technical indicators are also flashing warning signs of a possible extended pullback with the Relative Strength Index (RSI) flashing a retreat from overbought conditions on a 14-day basis. In the meantime, let’s take a look at the EUR/USD hourly and daily charts below.
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