EUR/USD Trades Steadily Above 1.1750 with Focus on Upcoming FOMC Minutes
Original article by FXStreet
The EUR/USD currency pair continued to hold steady above the 1.1750 level in late December trade, with market participants maintaining a cautious mood ahead of the release of the Federal Open Market Committee (FOMC) meeting minutes. This consistent tone in the euro follows a mixed batch of U.S. data and holiday-thinned liquidity, leaving investors searching for direction as they await critical macroeconomic clues.
Market conditions remain subdued amid the year-end lull, but traders are watching several key factors that could influence the near-term trajectory of the EUR/USD exchange rate. Among these are the expectations surrounding future U.S. Federal Reserve actions, economic data from the euro area, and geopolitical developments that may impact global risk sentiment.
EUR/USD Price Action and Technical Overview
– On the last trading day before the weekend, EUR/USD traded within a tight range above the 1.1750 mark.
– The pair has shown resilience in maintaining its stance over this support level despite a lack of strong directional conviction from investors.
– Recent price action indicates that the euro remains stable in comparison with the U.S. dollar, with the dollar lacking upward momentum in the absence of sharply positive economic indicators.
– Technically, the pair is oscillating between established support near 1.1730 and resistance at the 1.1800 psychological level.
– Momentum indicators such as Relative Strength Index (RSI) and Moving Averages hint at potential consolidation, as buyers and sellers remain somewhat balanced.
Expectations for FOMC Meeting Minutes
– Market attention is squarely on the Federal Reserve’s upcoming publication of the December FOMC minutes, which could provide crucial insights into the central bank’s policy direction into the first quarter of 2026.
– Investors are particularly eager to confirm whether the Fed plans to accelerate rate cuts in the coming year, or if policymakers remain cautious due to inflation stickiness or labor market strength.
– Any language in the minutes that signals dovishness or a shift in forward guidance could pressure the U.S. dollar and offer upside potential for EUR/USD.
– Conversely, a more hawkish tone, particularly concern about inflation risks, would likely offer some support to the dollar, potentially capping further euro gains.
Macroeconomic Data Overview and Implications
While market participants await the release of the FOMC minutes, they are also digesting recent economic indicators on both sides of the Atlantic. These figures offer mixed signals for the global economic outlook and the relative positions of the Federal Reserve and the European Central Bank (ECB).
Recent U.S. Economic Indicators:
– The U.S. economy continues to demonstrate resilience, though certain reports have missed forecasts in recent weeks.
– Consumer confidence remains moderately supportive, while inflation data suggests cooling pressures that may fortify the case for rate cuts in 2026.
– Labor market indicators, including weekly jobless claims and unemployment statistics, continue to show tight employment conditions, though with some signs of easing in workforce demand.
– Home sales and housing starts came in slightly below expectations, reflecting sensitivity to higher borrowing costs from prior interest rate hikes.
Recent Euro Area Data:
– Recent releases from the eurozone indicate a subdued economic recovery, with sluggish consumer demand and below-target inflation continuing to dominate headlines.
– German industrial production and business confidence indicators imply weak export momentum and tepid business growth, raising questions about the ECB’s capacity to pivot away from its restrictive stance in 2024.
– Inflationary pressures in the euro area have been receding, aligning with expectations for a more neutral ECB policy going forward.
– Eurozone Purchasing Managers’ Index (PMI) indicators have shown some preliminary signs of stabilization, though the broader trend remains cautious.
Dollar Movement and Correlation with Treasury Yields
The U.S. dollar has been marginally weaker against major currencies toward the year-end, including against the euro. This softness coincides
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