EUR/USD seesaws near 1.0600 with eyes on US GDP, Fed’s preferred inflation

EUR/USD makes rounds to 1.0600 during early Thursday, defending the weekly trading range of 90 pips, as traders await the US data for fresh impulse. In addition to the pre-data anxiety, the major currency pair’s latest inaction could be linked to the mixed catalysts from Eurozone and the US, not to forget the risk headlines.

The previous day, EUR/USD snapped a two-day uptrend with minor losses as firmer US data joined mixed comments from European Central Bank (ECB) officials.

Upbeat prints of Germany’s GfK Consumer Confidence for January, to -37.8 versus -38.0 expected and -40.1 prior, failed to impress the ECB policymakers as Bank of Portugal Governor Mario Centeno stated, “All data point to inflation reaching its peak in the euro area in the fourth quarter of 2022.”

It should be noted that the German Finance Ministry’s recently upbeat forecasts seem to favor the EUR/USD buyers. “Germany's finance ministry expects activity in Europe's biggest economy to remain subdued during the fourth quarter of this year and first quarter of next and sees declining inflation rates during 2023,” it said in its monthly report per Reuters.

Elsewhere, the US Conference Board’s (CB) Consumer Confidence jumped to the eight-month high of 108.3 for December, compared to the market forecasts of 101.0 and the revised prior readings of 101.40.

Talking about the risk catalysts, Ukrainian President Volodymyr Zelensky’s US visit and Russian President Vladimir Putin’s readiness to increase the country’s military potential challenges the market sentiment and the EUR/USD bulls of late. On the same line could be fears surrounding China’s economic growth.

Against this backdrop, Wall Street closed positive, and the US Treasury yields retreated. Even so, the US Dollar Index (DXY) snapped a two-day downtrend. It’s worth noting that the S&P 500 Futures remain mildly bid of late.

Looking forward, a lack of data/events from the bloc highlights the US Gross Domestic Product (GDP) for the third quarter (Q3) and Core Personal Consumption Expenditure (PCE) details for Q3. Forecasts suggest that the US GDP is expected to confirm 2.9% Annualized growth in Q3, while the Core PCE will also meet the initial estimates of 4.6% QoQ during the stated period. Also important will be Friday’s Core PCE Price Index for November, the Fed’s preferred inflation gauge.

Given the likely improvement in the scheduled US data, the EUR/USD prices may witness further downside in the case of firmer US statistics. However, a positive surprise won’t be ignored, especially when the pair has been in recovery mode lately.

Technical analysis

Bearish Doji candlestick joins a clear downside break of the six-week-old ascending support line, now resistance near 1.0685, to keep EUR/USD sellers hopeful. That said, a horizontal area comprising multiple levels marked since November 16, near 1.0450-40, appears to be the key support for bears to watch before aiming for the 200-DMA level surrounding 1.0335.