EURUSD, Nasdaq Forecast: Inflation Data and Holiday Volatility

Key Events

German Prelim CPI
Eurozone CPI
Santa Rally or Pause Before New Year?

Eurozone Inflation and Upcoming US Data With the euro trading at extreme lows, German prelim CPI, set for release today, is expected to drive volatility while the US Dollar remains on holiday due to Thanksgiving. As the euro trades near critical levels before the weekly and monthly close, its response to upcoming German and Eurozone inflation data will likely shape its December trajectory.

Next week, volatility risks remain high with key US economic data, including non-farm payrolls, ISM Services PMI, and ISM Manufacturing PMI, potentially shifting focus away from the "Trump effect." While Fed rate impacts have taken a back seat due to Trump's market influence, upcoming payroll data and rate anticipations—combined with seasonal holiday effects—could further stir volatility between Christmas and New Year.

Technical Analysis: Quantifying Uncertainties

EURUSD Forecast: 3Day Time Frame – Log Scale

Source: Tradingview

Between a potential bullish engulfing pattern on the weekly time frame, and a dragonfly doji on the 3-day time frame, aligning with oversold relative strength levels previously seen in October 2023, the EURUSD chart leans towards a bullish bias. Two scenarios are set ahead of the German CPI today and the Eurozone CPI on Friday

Bullish Scenario: the continuation of the rebound from the 1.0333 mark above 1.06 can reach the 1.07 and 1.0770 resistance levels respectively.

Bearish Scenario: a close below the 1.0333 mark can amplify parity risks with the dollar and further towards the 0.980 mark.

Nasdaq Forecast: Monthly Time Frame – Log Scale

Source: Tradingview

Analyzing the Nasdaq's monthly chart reveals that the so-called "Santa Claus rally" and subsequent New Year enthusiasm influenced market movements between 2022 and 2024. Currently, the Relative Strength Index (RSI) is approaching overbought levels last seen in 2021—a period when the holiday season marked a resistance for a year-long market correction. With Trump’s return to the White House in January 2025, extended bullish momentum could be possible, and key levels remain pivotal to quantifying the scenario.

Nasdaq Forecast: Weekly Time Frame – Log Scale

Source: Tradingview

The Nasdaq’s uptrend shows potential for further gains above the 20,200 level, which aligns with the key open and close levels of October trading weeks. A decisive break above 21,200 could extend the rally towards the 21,700-mark.

On the downside, a close below 20,200 may find support near the lower boundary of the primary uptrend channel at 19,900 and 19,600. Should the index breach the critical 19,200 level, it could open the path to further declines, targeting 18,700, 18,200, and potentially 17,000 in a bearish scenario.

--- Written by Razan Hilal, CMT on X: @Rh_waves

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