Bullish View
Buy the EUR/USD and set a take-profit at 1.1400.
Add a stop-loss at 1.1250.
Timeline: 1 day.
Bearish View
Set a sell-stop at 1.1300 and a take-profit at 1.1250.
Add a stop-loss at 1.1350.
The EUR/USD pair moved sideways in the overnight session as US stocks continued their Santa Claus rally. The pair is trading at 1.1323, where it has been in the past few days.
US Holiday Sales
Consumer spending is the biggest constituent of the American economy. Therefore, traders and policymakers typically watch the country’s consumer confidence and retail sales data.
Last week, data by the Conference Board showed that the country’s consumer confidence rose to about 115 in December even as inflation rose and the supply chain disruptions increased. This data signalled that the American consumer was starting to become confident about the economy.
And on Monday, Mastercard published its estimates of the country’s holiday sales. The firm said that holiday sales rose by 8.5% in the holiday season that is defined as between November 1 and December 25. This is an important period since it is usually the busiest shopping period of the year.
Therefore, these numbers reinforce the Federal Reserve’s view that the American economy is in a good place even as inflation remains stubbornly high. Last week, data by the statistics agency revealed that the closely watched personal consumer expenditure (PCE) index rose to the highest level since 1982. This is an important number since it is the one that the Federal Reserve watches a lot.
Propelling the bullish view of the American economy is the recent reports on the Omicron variant. While the number of cases is rising, the mortality rate in the US and other countries has not increased dramatically. Still, there is a likelihood that the supply chain challenges will continue as more people stay away from work.
The EUR/USD will likely remain in a tight range today. The key data to watch will be the latest US house price index (HPI).
EUR/USD Forecast
The four-hour chart shows that the EUR/USD pair has been moving sideways in the past few weeks. As a result, the pair has remained between the key support at 1.1235, which was the lowest level in December. The upper part of the rectangle channel was at 1.1360.
It is also slightly above the 25-day moving average and along the standard pivot point. The pair is also slightly above the 23.6% Fibonacci retracement level. Therefore, it will likely remain in a consolidation level on Tuesday although some volatility can’t be ruled out.
