EUR/USD Outlook: Risk Sentiment Improves on Positive US Data

• US consumer confidence reached an eight-month high in December.
• The confidence comeback coincided with a similar increase in the sentiment index at the University of Michigan.
• The US labor market will probably relax, and unemployment will rise in 2023.

Today’s EUR/USD outlook is bullish. The dollar weakened as risk sentiment increased in response to encouraging data showing that US consumer confidence reached an eight-month high in December as inflation went down and the labor market remained robust.

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The Conference Board reported that its consumer confidence index improved from 101.4 in November to 108.3 this month, the highest figure since April. Economists predicted that the index would be at 101.0.

Despite the survey’s greater focus on the labor market, the confidence comeback coincided with a similar increase in the sentiment index at the University of Michigan.

Based on consumers’ assessments of the current state of the economy and labor markets, the present situation index increased from 138.3 last month to 147.2 this month. Based on consumers’ short-term expectations for the economy, businesses, and the labor market, the expectations index rose to 82.4 from 76.7.

Employers have typically been reluctant to fire employees after having trouble filling positions during the COVID-19 epidemic, even if there have been job losses in the technology industry and the property market, where loan rates are too sensitive.

However, economists predict that with the housing industry in a slump, the labor market will relax, and unemployment will rise in 2023.

EUR/USD key events today

Investors will watch US GDP data to determine how the economy is doing with rising interest rates. It will also reveal whether a recession is going to hit the economy. The initial jobless claims report will also be made public in the US.

EUR/USD technical outlook: Bulls ahead in the 1.0580-1.0670 range

EUR/USD is trading within a tight range with support at 1.0580 and resistance at 1.0670. The price is currently above the 30-SMA, while the RSI is trading above 50. This shows bulls are in control and are looking to retest the range resistance.

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If bulls gather enough strength, they might be able to break above the range resistance and confirm a bullish trend. However, if the 1.0670 level holds strong, the price might bounce lower to the range support.

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