- The US Michigan Consumer Confidence Index improved to 59.1 in December.
- The uncertainty surrounding the US Federal Reserve’s decision weighs on mood.
- EUR/USD eases following upbeat US data but holds above 1.0500.
Despite a knee-jerk mid-week, the EUR/USD pair is comfortably trading above the 1.0500 threshold, seesawing around 1.0530 following the release of the December University of Michigan's (UoM) Consumer Confidence Index, which rose by more than anticipated, to 59.1 from 56.8 in November. Market players had anticipated a setback to 53.3
Upbeat US data helped the US Dollar by the end of the week amid a deteriorating market sentiment. US indexes turned lower with the release, as speculative interest anticipates a potentially aggressive US Federal Reserve. The central bank has anticipated it would slow the pace of quantitative tightening, and Chair Jerome Powell hinted it could happen as soon as this month.
However, resilient macroeconomic data leaves the door open for yet another 75 bps hike, ahead of a smaller one. Recession concerns add to the dismal mood, as the higher rate goes, the higher are the chances of an economic setback.
EUR/USD technical perspective
According to Valeria Bednarik, FXStreet.com chief analyst, “The EUR/USD pair weekly chart shows that the pair posted a higher high and a higher low, maintaining the risk skewed to the upside. The same chart shows that the 20 Simple Moving Average (SMA) advances far below the current level, at around 1.0080, while technical indicators consolidate near overbought readings, all of which favors a bullish continuation. Finally, the 100 SMA is crossing below the 200 SMA, both far above the current level, losing relevance as a bearish signal.”
She also added that “ EUR/USD needs to break above 1.0580 to be able to extend its gains towards 1.0620 first, and 1.0700 later. A break above the latter should bring the 1.1000 figure to the table. Buyers stand at around 1.0490, while the next support level is 1.0420. An unlikely slide below the latter could favor a downward extension towards 1.0300.”
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