EUR/USD: US GDP beats expectations

The US macroeconomic dynamics continue to fuel debate in the foreign exchange market. The United States recorded annualized GDP growth of 4.2% in the third quarter, the fastest pace in two years, driven by robust household consumption and business investment. At the same time, core inflation, as measured by the personal consumption expenditures index, came in at 3%, still above the Federal Reserve's target, which explains the caution displayed by monetary policymakers regarding the future pace of easing.

This macroeconomic picture, however, remains mixed. US consumer confidence deteriorated again in December, for the fifth consecutive month, reflecting persistent concerns related to the cost of living, the labor market, and political uncertainties. This divergence between strong economic indicators and fragile consumer sentiment reinforces the idea that the central bank will have room to lower interest rates in 2026, an assumption now widely priced in by the markets. Against this backdrop, the dollar continues to weaken, heading for its worst annual performance since the early 2000s.

In the EU, the situation appears more balanced. The ECB recently kept its key interest rates unchanged while revising some of its macroeconomic projections, which has helped support the single currency. The divergence in monetary policy paths between the two blocs, combined with a heightened perception of political and institutional risk in the United States, is driving a gradual shift of flows toward the euro.

From a technical perspective, the euro-dollar pair is firmly in an upward trend. The euro remains above its 20-period moving average, which is itself trending upward, while the Bollinger Bands remain open, signaling continued momentum. This setup supports an extension of the current upward movement, with the euro now well-positioned to test, or even surpass, its yearly highs.

MEDIUM-TERM FORECAST
Based on the key technical factors mentioned above, our medium-term outlook for the EUR/USD pair is positive.

Our entry point is $1.1796. The price target for our bullish scenario is $1.1919. To protect your capital, we recommend placing a stop-loss order at $1.1386.

The expected profit for this forex strategy is 123 pips, and the potential loss is 410 pips.