EUR/USD: what traders need to watch for in the next 2 days

Currency traders working on the EUR/USD have a fairly clear agenda for the next two days: the publication of US consumer prices, in monthly data today at 14:30 (EU time), and the outcome tomorrow of the last Governing Council of the year for the ECB.

In the broadest product base, prices are expected to rise by 2.8% on an annual basis compared to 2.7% in October. Any significant deviation from this consensus could impact the probabilities of a 25-point drop in the basis for the remuneration of the Fed Funds on 18 December. These probabilities are now around 85%.

The problem is different for the ECB, which must have in mind the revival of a sluggish economy, particularly in Germany, while benefiting from a relatively comfortable margin of maneuver to gradually lower its key rates. "Growth is clearly becoming a more crucial topic in the short term in Europe than inflation, even though the ECB is officially only concerned with the latter," adds Manuel Auboyneau, partner at Amplegest.

"The update of macroeconomic projections will play a key role," warns Martin Wolburg, senior economist at GENERALI ASSET MANAGEMENT. "In particular, the growth forecast for 2025, currently at 1.3%, is likely to be revised downwards. Headline and core inflation are expected to converge towards the target for most of the forecast horizon, which will be extended to 2027. The impending US tariffs and the economic repercussions of political tensions in France and Germany will help balance the risks to inflation."

Join us at 14:30 for US consumer prices.

Right now, the EUR/USD is trading at $1.0505.

KEY GRAPHIC ELEMENTS
The wedge formed since November 22 is coming to an end, and the pent-up energy is now compressed. An exit from the downside, consistent with the entry from the upside in the second half of November in a volatile environment, is anticipated.

MEDIUM-TERM FORECAST
In view of the key graphic factors that we have mentioned, our opinion is negative in the medium term on the EUR/USD.

Our entry point is at $1.0494. The price target of our bearish scenario is at $1.0101. To preserve the capital invested, we advise you to position a protective stop at $1.0591.

The expected profitability of this forex strategy is 393 pips and the risk of loss is 97 pips.