The EURUSD awaits FOMC minutes this week as the market remains light on volume and cautious on direction.
EURUSD – Daily Chart
EURUSD trades at 1.7703 and is just below a resistance level at the 1.1830 level. That will be the target for the first days of January.
U.S. President Trump said a peace deal in Ukraine is “a lot closer” after he met his Ukrainian counterpart on Sunday.
The highlight of the week will be the release of the minutes of the Federal Reserve’s December meeting, when the central bank cut its benchmark rate by another 25 basis points. Although it is released overnight on Tuesday, it will likely set the tone for the pair this week and the early days of January until data resumes. Investors are confident that the weak labour market will force the Fed to cut rates at least two times next year.
Monetary policy differences between a slightly hawkish European Central Bank and a dovish Fed are dragging on the USD. However, geopolitics could still spring a surprise after China announced “major” military exercises around Taiwan on Monday. Taipei officials confirmed that several Chinese vessels have been seen close to Taiwan’s territorial waters. Any escalation could boost the U.S. dollar’s safe haven effect.
The U.S. economy posted strong growth figures for the most recent quarter, but a large percentage of the gains came from AI investment. Other indicators show the consumer is weak and that jobs are hard to create, highlighting a recessionary trend, despite the high GDP reading.
After the U.S. government finally ended the longest government shutdown in its history, the market got a weak jobs release. The US economy lost 105,000 jobs in October and added 64,000 jobs in November, according to the Bureau of Labor Statistics. The unemployment rate also rose to a four-year high of 4.6%, while October retail sales remained flat, marking the lowest reading in five months.
The USD’s only hope for a rebound in 2026 may have to rely on safe haven flows.
