The EURUSD outlook for the week of December 22–28 suggests that a bearish trend will remain intact, with modest attempts to consolidate in a narrow range. This forecast stems from reduced liquidity during Christmas holidays.
Recent US inflation data came in slightly higher than expected (2.4–2.6%), forcing the Federal Reserve (Fed) to be cautious regarding future interest rate cuts. In the meantime, the eurozone sees consumer prices near the 2% target. However, the region’s stagnant economy is weighing on the European Central Bank (ECB). Under these circumstances, traders are factoring in more aggressive monetary easing.
The US labor market remains fairly resilient, with the unemployment rate fluctuating between 4.1% and 4.2%. Steady workforce demand keeps underpinning the dollar as a safe-haven asset. The situation in Europe is trickier, as Germany is struggling under the pressure of an industrial downturn that destabilizes the euro.
Fed officials have recently stated their data-dependent approach to future policy. According to them, a pause in lowering borrowing costs is possible. ECB Governor Christine Lagarde, in turn, is focused on supporting the national economy, thereby widening the interest rate differential to the euro's disadvantage.
However, it is important to keep in mind that liquidity will fall sharply starting December 24, resulting in either a complete halt to trading or extreme price volatility due to the absence of major players—a condition known as a thin market.
Overall, the EURUSD pair is expected to slither down to 1.1700. Ahead of the weekend, traders are advised to make well-considered decisions.
The ultimate recommendation is to sell EURUSD. Lock in profits at the level of 1.1700. Place Stop Loss at 1.1730.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
