EURUSD - Euro in the new year!The EURUSD currency pair is below the EMA200 and EMA50 in the 4-hour time frame and is moving in its downward channel. Maintaining the drawn upward trend line will lead to the continuation of the upward trend towards the top of the channel.
In the Eurozone, inflation, which peaked at 10.6% in 2022, has been steadily declining and has approached the European Central Bank’s 2% target since early this year. Economists at Vanguard have projected: “Amid weak economic growth, we expect both headline and core inflation to fall below 2% by the end of 2025.”
The OECD forecasts that the Eurozone’s annual growth will reach 0.8% this year and rise to 1.3% and 1.5% in 2025 and 2026, respectively. However, 2025 could present significant challenges for the Eurozone’s economic activities, particularly with the anticipated U.S. tariff policies.
Mastercard reported that total U.S. retail sales during this holiday season grew by 3.8%.Online shopping remained the preferred choice for consumers, experiencing a 6.7% growth compared to last year. Additionally, retail sales, excluding automobiles, increased by 3.8% from November to December 24 compared to the same period last year.
Inflationary risks in the U.S. remain prominent, partly influenced by President Trump’s proposed policies, particularly on tariffs and immigration. Consequently, consumer spending, a key driver of U.S. economic growth since the pandemic, might face challenges as trade policies affect the prices of imported goods, including apparel, vehicles, and steel.
According to the latest U.S. jobs report, the economy added 227,000 new jobs in November, while October’s job gains were revised to 36,000. The average monthly job growth in 2024 was approximately 180,000. Unemployment rose to 4.2% in November, exceeding expectations.
Despite this increase, the U.S. long-term unemployment rate remains historically low. Wage growth in November was consistent with October’s figures, showing a 0.4% monthly and annual increase, slightly above market expectations. Overall, the U.S. labor market is showing clear signs of easing contractionary pressures.
Silvercrest Asset Management Group analysts expect job growth to persist due to the high number of open positions. According to the latest JOLTS report, there were 7.74 million job openings in the U.S. as of October. While this is significantly lower than the 12 million openings during the pandemic, it remains above the typical 6-7 million range seen in the late 2010s.
In the Eurozone, the October employment report revealed a historically low unemployment rate of 6.3%. This indicates that the anticipated economic slowdown and hiring reductions have not yet significantly impacted labor market stability. Meanwhile, wage growth in the Eurozone reached a record high of 5.5% this year, potentially adding inflationary pressures.
Economists at Vanguard anticipate that, with Germany’s economic growth slowing sharply, the Eurozone’s unemployment rate will rise to above 6% by the end of 2025. Analysts at Goldman Sachs share this outlook, stating: “Given our forecast for weaker economic growth, we expect unemployment to rise next year, reaching 6.7% by early 2026. Additionally, we anticipate wage growth to decline to 3.2% by the end of Q4 2025, as wage adjustment trends conclude and the labor market softens.”
