EUR/USD paddles near 1.1050 to round out 2023

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.

Joshua Gibson FXStreet

The EUR/USD is trading flat on Friday, the last trading session of 2023. The Euro (EUR) is on pace to close up 3% against the US Dollar (USD) for 2023, rallying 5.8% from the year’s bottom bids near 1.0450 in October. The EUR/USD is still down nearly 2% from 2023’s peak at 1.1275 set in July, but the pair is leaning firmly into the bullish side as broader markets continue to sell off the Greenback in anticipation of rate cuts from the Federal Reserve (Fed) in 2024.

US Dollar to end 2023 on the low side as markets bet big on rate cuts

With meaningful Eurozone economic data absent from the calendar until the HCOB Eurozone Composite Purchasing Managers’ Index (PMI) on January 4, it’s up to the US data docket to do the heavy lifting to round out the trading year.

The US Chicago PMI for December missed the mark on Friday, printing at a contractionary 46.9 versus November’s 18-month peak of 55.8, slipping past the median market forecast of 51.0. Softening economic data from the US continues to counter-intuitively 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; money markets are pricing in upwards of 160 basis points to come off the Fed’s main reference rate by the end of next December.

EUR/USD Technical Outlook

With the EUR/USD stuck in place near 1.1050 on the intraday charts, the Euro is set to drift between the 50-hour and 200-hour Simple Moving Averages (SMAs) as the 2023 trading year rounds the corner into 2024.

A protracted post-holiday trading week will give way to another extended holiday following the New Year’s market closures, and 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 and the 50-day SMA accelerating into a bullish cross of the 200-day SMA near 1.0850. 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.

EUR/USD Hourly Chart

EUR/USD Daily Chart

EUR/USD Technical Levels

EUR/USD

Overview
Today last price	1.106
Today Daily Change	-0.0006
Today Daily Change %	-0.05
Today daily open	1.1066

Trends
Daily SMA20	1.0912
Daily SMA50	1.0819
Daily SMA100	1.0758
Daily SMA200	1.0843

Levels
Previous Daily High	1.114
Previous Daily Low	1.1055
Previous Weekly High	1.104
Previous Weekly Low	1.0892
Previous Monthly High	1.1017
Previous Monthly Low	1.0517
Daily Fibonacci 38.2%	1.1087
Daily Fibonacci 61.8%	1.1107
Daily Pivot Point S1	1.1034
Daily Pivot Point S2	1.1002
Daily Pivot Point S3	1.095
Daily Pivot Point R1	1.1118
Daily Pivot Point R2	1.1171
Daily Pivot Point R3	1.1203

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.