EUR/USD Forecast: Euro Area and US Consumer Confidence and Fed Speakers in Focus

Highlights

• The EUR/USD gained 0.19% on Monday, ending the session at $1.09535.
• ECB commentary continued supporting a slow EUR/USD move toward $1.10.
• On Tuesday, French and German consumer sentiment will be in focus ahead of US consumer confidence numbers and Fed speakers.

Monday Overview

The EUR/USD gained 0.19% on Monday. Following a 0.28% rise on Friday, the EUR/USD ended the day at $1.09535. The EUR/USD rose to a high of $1.09591 before falling to a low of $1.09248.

Consumer Confidence in the Spotlight

On Tuesday, French and German consumer confidence figures will garner investor interest. A pickup in euro area consumer confidence could signal a positive consumer spending outlook. An upswing in consumer spending would fuel demand-driven inflation and support the ECB’s stance on monetary policy.

However, a positive outlook could also ease fears of a prolonged euro area recession. Euro area private consumption contributes over 50% to the Eurozone economy.

Economists forecast the French Consumer Confidence Index to increase from 84 to 85 in November. Importantly, economists expect the GfK Consumer Confidence Index to rise from -28.1 to -27.0 for December.

Beyond the numbers, ECB President Christine Lagarde and Chief Economist Philip Lane are on the calendar to speak. Comments from Philip Lane could draw more interest, with ECB President Lagarde unlikely to deviate from recent speeches.

US Consumer Confidence and Fed Speakers in Focus

On Tuesday, US consumer confidence figures warrant investor attention. A slump in consumer confidence could fuel bets on a May Fed rate cut. Waning consumer confidence would signal a negative consumer spending outlook. A downward trend in consumer spending would soften demand-driven inflation and ease the need for a hawkish Fed rate path to tame inflation.

Economists forecast the CB Consumer Confidence Index to decline from 102.6 to 101.0 in November.

Other stats include US house price data. However, barring a sharp fall in house prices, consumer confidence will be the focal point.

Beyond the US stats, Fed speakers need monitoring. FOMC members Austan Goolsbee, Christopher Waller, and Michael Barr are on the calendar to speak.

Short-Term Forecast:

Fed and ECB speakers and consumer confidence reports will influence the buyer appetite for the EUR/USD. However, inflation figures from the euro area and the US draw more central bank scrutiny and dictate near-term EUR/USD trends.

EUR/USD Price Action

Daily Chart

The EUR/USD sat above the 50-day and 200-day EMAs, sending bullish price signals. Significantly, the 50-day EMA converged the 200-day EMA. A bullish cross of the 50-day EMA through the 200-day EMA would give the bulls a run at $1.10.

A EUR/USD return to $1.10 would support a move to the $1.10720 resistance level.

Central bank speeches and consumer confidence figures are focal points for the session.

However, a EUR/USD fall through the $1.09294 support level would give the bears a run at the $1.08500 handle.

The 14-period Daily RSI, 69.33, suggests a EUR/USD return to the November 21 high of $1.09652 before entering overbought territory.

4-Hour Chart

The EUR/USD held above the 50-day and 200-day EMAs, affirming bullish price signals.

A EUR/USD move to $1.10 would bring the $1.10720 resistance level into play.

However, a EUR/USD break below the $1.09294 support level would give the bears a run at the 50-day EMA.

The 14-period RSI on the 4-hour chart, 63.67, suggests a EUR/USD move to the $1.10720 resistance level before entering overbought territory.