Forex Weekly Forecast: Pairs Struggle as Holiday Thins the Market

NEW YORK, NY – EUR/USD opens the December 23 trading day with gains while GBP/USD remains flat. The pair is forecasted to struggle this week as post-election hopes are diminished. Analysts are also doubting if any major pair will show any significant progress this week.

With the holidays fast approaching, major foreign currency pairs are relegated to very thin levels. The market opened on a positive note, but movements are limited. However, the United States will release its November Durable Goods Orders today and it could result in some changes.

The EUR/USD pair is trading past the 61.8% retracement of its previous advance at 1.1065, but it’s below the 50% retracement of the same rally at 1.1090.

The pair’s upside appears to be blocked by the 20-day moving average that is pushing past the 1.1100 major figure level. But its downside could experience some pressure if the American dollar continues to grow stronger as the year ends. Traders are expecting very little movement until the US data is released.

Meanwhile, GBP/USD exchange rates are stable as the week gets underway. The pair is trading at around $1.2995 and remains virtually unmoving since the day’s opening rate.

The pound fell 2.5% last week as it was pulled down by several issues. The manufacturing and services sector missed their forecast while wage growth was slow at 3.2%. Retail sales declined by 0.6%. There was an attempt to recover but it fizzled out and is now back to pre-UK elections level.

The GBP is also constrained in a narrow range as trading starts to thin out and give way to the yearly-holiday doldrums.

The US dollar is holding strong as the markets react to China’s decision to further open its economy to foreign countries. Beijing announced earlier today their plans to reduce tariffs on hundreds of goods. The decreased tariffs will take effect on January 1 and will include products like frozen pork and technology-related goods.

Currencies that are closely connected to global trade enjoyed gains. The Australian dollar, which typically reflects world sentiment on China, went up by 0.21% to $0.6921. The New Zealand dollar also rose by 0.2% to $0.6619. Meanwhile, the yen is still at 109.39 per USD.

There’s also a holiday mood in Asia so traders are expecting things to be light and slow for the next two weeks.

Most currencies in the region dropped today. Thailand’s baht dropped by more than 0.2%. The won also weakened after South Korea’s exports were reported to have decreased again this year. The Singapore dollar also slipped.