The upcoming week, which falls at the turn of the year, lacks important fundamental events. Nevertheless, in a "thin" market, even minor releases can trigger strong volatility. Therefore, every report and every release matter during the New Year period.
On Monday, data on pending home sales in the U.S. will be released. This report reflects the number of real estate transactions for which contracts have already been signed but not yet closed. It serves as a leading indicator of the American real estate market, as contracts are typically signed well in advance (usually 4-5 weeks) of the actual sale, which correlates with future housing sales data.
According to forecasts, pending home sales for November are expected to increase by only 0.9%, following an almost two percent (1.9%) increase in the previous month. The dollar will come under pressure only if the number unexpectedly falls into negative territory.
On Tuesday, December 30, the FOMC minutes—the protocol of the December Federal Reserve meeting—will be released. Recall that following this meeting, the central bank lowered the interest rate by 25 basis points, implementing the most anticipated scenario. However, the details of the December meeting were quite contradictory.
On one hand, the Federal Reserve did not explicitly announce further rate cuts at one of the upcoming meetings. The updated median forecast (dot plot) suggests only one 25-basis point rate cut in 2026. A similar forecast was communicated following the September meeting as well.
On the other hand, the rhetoric of Fed Chair Jerome Powell during the final press conference was relatively dovish—softer than expected. He emphasized the state of the U.S. labor market, acknowledging that it continues to cool. Powell also mentioned "significant downside risks" for employment. Regarding inflation, he did not dramatize the situation. He stated that inflation has slowed, although it remains "somewhat elevated" relative to the Fed's long-term target of 2%. Meanwhile, short-term inflation expectations have declined (compared to peak values earlier this year).
Overall, market participants interpreted the December meeting results as unfavorable for the dollar. The protocol from this meeting could either amplify or weaken the pressure on the greenback. If the minutes highlight concerns about rising inflation, dovish expectations will dissipate (including in the context of the March meeting), strengthening the dollar's position across markets. Conversely, if the Fed focuses on issues in the U.S. labor market (rising unemployment, slowing hiring, deteriorating supply-demand balance), the dollar will face additional pressure.
It is also important to note that the probability of a rate cut at the January meeting is only 17% (according to the CME FedWatch tool), while the likelihood of a rate cut in March is estimated at 52%. If the tone of the December meeting's minutes is dovish, the chances of a March rate cut could approach 60%, putting pressure on the dollar.
Additionally, on Tuesday, the housing price index for the 20 largest U.S. metropolitan areas, calculated by S&P/Case-Shiller, will be published. This is one of the key indicators of the real estate market's state, widely used for trend analysis. Since January of this year, the index has been showing a downward trend, dropping from 4.8% (January 2025) to 1.4% (September). According to preliminary forecasts, the index is anticipated to decline again in October, this time to 1.1%. For dollar bulls, this indicator must not fall into negative territory (especially if Pending Home Sales, released on Monday, also comes in below zero).
The most significant report on Wednesday will be the Unemployment Claims report. The increase in initial jobless claims has decreased for the second consecutive week, after a sharp spike to 237,000. This week, the indicator may again demonstrate a downward trend, decreasing to 213,000. If the figure aligns with expectations, market reaction will be weak—traders may even ignore the release altogether. Strong volatility is expected only if Unemployment Claims deviates significantly from the projected value—if it is above 220,000 or below 210,000.
On Wednesday, China will also release the manufacturing PMI index. According to forecasts, the indicator will remain in the contraction zone, although it will rise from 49.2 to 49.4. The non-manufacturing activity index is also expected to stay below the 50-point level (49.8). If both indicators exceed the 50.0 mark contrary to forecasts, risk appetite in the market will increase, leading buyers of EUR/USD to strengthen their positions.
Thursday is New Year's Day, so major trading venues worldwide will be closed. The currency market will be paused.
The economic calendar for Friday is also nearly empty. The only report of academic interest is the PMI indices (final data for December), which will be released in key Eurozone countries. However, if the final estimates align with the initial ones (which is most likely), traders will likely ignore this release.
Thus, the upcoming week does not promise to be informative—the most important macroeconomic reports will begin to come out starting January 5. However, amidst a "thin market," even secondary releases can provoke volatility. Attention will be on the FOMC minutes, Unemployment Claims, and U.S. housing market data.
