The euro remains steady today—the final trading session before the Christmas holidays. The currency had edged up against the US dollar after the German Consumer Climate was revealed to have climbed to 9.9 points, surpassing the 9.8 points estimate.

Additionally in the release front, the US UoM Consumer Sentiment is being looked forward toas the week wraps up before Christmas. The markets are forecasting a rather strong improvement to 98.2 points.

US Key Data

Earlier this week, trading sessions were rather quiet and came Thursday with plenty of data for the markets to digest. That includes US gross domestic product (GDP) for the final quarter gained 3.5%, above the estimate of 3.3%.

Durable goods reports came in mixed; Core Durable Goods Orders climbed 0.5% compared to the 0.2% projections. Durable Goods Orders had sharply declined by 4.6% but nonetheless was better than the forecasted 4.9% loss.

With the labor market, unemployment claims had climbed to 275,000, worse than the expected 255,000. However, the for-week average of jobless claims still lingers at low levels.

Meanwhile, the US economy keeps up to expand at an abrupt clip, as highlighted by the most recent revision to the third-quarter GDP.  The final GDP figure of 3.5% caused an upward revision for a previous 3.2% forecast. This excellent reading stemmed from stronger consumer spending and gains in business investment, and this marked the strongest growth rate since 2015’s third quarter.


Fed Rate Hike

With the Federal Reserve raising interest rates by a quarter point in the prior week, markets can expect three or even four more rate hikes in 2017. Earlier in September, during which speculations of a rate increase began to fuel, Fed authorities said they estimated two rate hikes in the following year. However, with the US economy displaying firm growth and the job market close to capacity, officials have stated three to four rate increases are possible next year.

Keep in mind that forecasts can still change based on conditions, and the markets will naturally be hesitant and doubtful about interest rate projections.

Additionally, the incoming new administration under Donald Trump could be a key player in the Fed’s monetary stance. Trump’s economic platform remains cloudy, but there are growing speculations about what we call a “Trumpflation”; markets are seeing that Trump’s plans to axe taxes and boost fiscal spending will eventually lead to higher inflation. Should inflation levels accelerate in early 2017, there will be pressure on the central bank to take action and hike rates.

EUR/USD Analysis

As of writing (13:15 GMT), EUR/USD is up by 0.10% to 1.0446, approximately narrowed to a 15-tick range on either side of $1.0450. Friday’s fundamental factors for the currency pair besides the German Consumer Climate and US Revised UoM Consumer Sentiment included the French Consumer Spending, which had disappointed the estimate 0.4% with its actual result of 0.1%, and the New Home Sales in the US, scheduled to be announced later by 15:00 GMT.


EUR/USD has also shown limited movement in the Asian and European session. Currently, 1.0414 is providing support and 1.0506 is the next resistance line. The pair’s ratio is barely changed in the Friday trading session.

Currently, long positions have a majority at 57%, suggestive of trader bias towards EUR/USD continuing to move upwards. If EUR/USD closes higher, this would be the third consecutive rally, but it has to close above the midpoint of today's range if it is to snap a two-week downtick.

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