Year-End Focus: Fed & ECB’s Last 2023 Rates
EUR/USD Technical Analysis: Key Levels and RSI Dynamics.
It looks like the United States economy cannot be stopped by the Fed’s tight monetary policy, as evidenced by Friday’s jobs data which exceeded expectations yet again. The Non-Farm Payrolls (NFP) showed that 199K new jobs were created during the previous month (higher than the forecast 184K and the previous 150K). The Unemployment Rate and Average Hourly Earnings outperformed predictions as well, showing that the labor market is going strong and hinting that the US economy may be in for a soft landing.
This week we are getting ready for the last spurt of extreme volatility of the year as both the Fed and the ECB are preparing to announce the final rate decisions for 2023. The entire week is filled with high-impact events that are worth keeping an eye on, especially considering that things will start to tone down after that, in anticipation of the Winter Holidays.
Key Data for the Week Ahead
The economic week opens Tuesday with the U.S. Consumer Price Index, which is the main gauge of inflation. The release is scheduled for 1:30 pm GMT and the numbers are expected to be very similar to the previous.
Wednesday at 1:30 pm GMT the PPI and Core PPI will come out, followed at 7:00 pm GMT by the Fed Funds Rate and the FOMC Economic Projections. According to the CME FedWatch tool, there’s a 98.4% chance that the rate will remain unchanged. At 7:30 pm GMT, Fed Chair Powell will hold the usual press conference.
Thursday it’s the ECB’s turn to announce the interest rate and will do so at 1:15 pm GMT. Similar to the Fed, the ECB is not expected to change the current rate. At 1:45 pm GMT, ECB President Lagarde will hold a press conference. On the US Dollar side, we have the Retail Sales report, which comes out between the two Euro events, at 1:30 pm GMT.
Friday is PMI day with a bunch of these reports coming out early in the morning for the French, and German economies, followed at 1:30 pm GMT by the Empire State Manufacturing Index and at 2:45 pm GMT by the Manufacturing and Services PMIs for the U.S. economy.
Technical Outlook – EUR/USD
The bears and bulls are currently battling for control on the 1.0775 level and in very close vicinity of the 50-day Moving Average. If the pair reaches this point of interest, we may see a reversal but a lot will depend on the economic data that comes out throughout the week.
The Relative Strength Index is moving down after bouncing on the overbought level, but it is not showing an extreme condition. In other words, the current move down can continue at least until the RSI becomes oversold or the pair reaches the 50-day MA.
The levels to watch are 1.0635 to the south and 1.1000 to the north. Of course, the current level (1.0775) and the 50-day MA are also key elements for short and medium-term movement.
