There is only a week and a half left until the New Year, and just a few days until Christmas, during which the market often slows down in a pre-holiday lull. Nevertheless, the economic calendar for the upcoming week is not empty.

The report on U.S. economic growth for the third quarter will be released on Tuesday, December 23. This is likely the most critical release of the week. Due to the government shutdown, the standard schedule for the release of U.S. Q3 GDP data was altered. The preliminary estimate was canceled, so next week will see the first available release that effectively combines the first and second estimates of GDP. The January data update will be analogous to the third (final) estimate, further strengthening the significance of the December report.

Preliminary forecasts suggest that the U.S. economy grew by 3.2% in the third quarter, down from a 3.8% growth in the previous quarter. The latest assessment from the GDPNow model indicates an estimated GDP growth of around 3.5%. However, this is not the final assessment but rather a forecast model based on current data for industrial activity, consumption, and trade at the time of publication.

It is worth noting that in the first and second quarters, foreign trade significantly distorted the GDP growth picture. In the first quarter, American companies dramatically increased imports ahead of the introduction of "big tariffs" in April. As a result, this figure "crashed" the U.S. economy on paper since imports are subtracted in the GDP formula. In the second quarter, imports "accelerated" GDP, as this component of the report sharply declined, thereby improving net exports and making GDP appear excessively strong. But again, this was not due to an accelerated economy but because the distortion from the previous quarter disappeared.

Thus, the upcoming release is particularly significant for EUR/USD traders, as the third quarter should show the actual dynamics of the U.S. economy. Imports and exports have "behaved calmly," and the shutdown occurred within the fourth quarter. Therefore, GDP growth will be much "cleaner" and more indicative than in the first and second quarters.

Given this preview, there is little doubt that the release will provoke strong volatility across all dollar pairs, and the EUR/USD pair will be no exception. If the report comes in at or above the forecast, dovish expectations of further Federal Reserve actions will weaken, and the dollar will regain strength. Against the euro, the greenback is likely to break the support level at 1.1690 (the upper boundary of the Kumo cloud on the daily chart) and secure itself within the 16th figure. Conversely, if the report lands in the "red zone," buyers can anticipate a retest of the 18th figure.

However, the U.S. GDP growth report is not the only significant release scheduled for the upcoming week. On the same day—Tuesday—the Conference Board will release its Consumer Confidence Index in the United States. For two fall months (September and October), this indicator remained steady at the same level (95.6; 95.5); however, it saw a sharp and unexpected decline in November, dropping to 88.7. Most analysts believe that December will show positive dynamics, recovering to 91.7. Such a result would support the U.S. dollar, especially if the U.S. GDP growth report comes in at the forecast level or in the green zone. Conversely, if the index comes in below the target of 88.7 (i.e., continuing to decline), the dollar would be under significant pressure, as such a result would indicate a further deterioration in consumer sentiment, possible decreases in their spending, and an increased likelihood of economic slowdown.

Another fairly important macroeconomic report expected next week is the Unemployment Claims report. For the previous week, the number of initial claims for unemployment benefits fell to 224,000, down from an earlier increase of 237,000. This spike was preceded by a significant drop to 192,000. However, this drop was due to the "holiday factor" (Thanksgiving), so traders viewed this result skeptically. Forecasts suggest that the number of initial claims will rise to 220,000 in the upcoming week. This is considered an "average" result that the market will likely ignore. The report will only provoke volatility if it deviates significantly from the forecast—either downward (to around 200-210K) or upward (to 230-240K and above). In such cases, EUR/USD traders will respond accordingly.

In essence, this week represents the final chords of trading, as the Catholic world will celebrate Christmas next week (with trading venues in many countries being closed), and the New Year is just around the corner. Markets will enter a pre-holiday/post-holiday lull until early January.

From a technical perspective, the EUR/USD pair is still positioned between the average and upper lines of the Bollinger Bands indicator on the D1 timeframe, and above all the lines of the Ichimoku indicator (except for the Tenkan-sen). On the 4-hour chart, the pair is situated between the average and lower lines of the Bollinger Bands, within the Kumo cloud, and below the Tenkan-sen and Kijun-sen lines. If EUR/USD sellers are unable to break the support level of 1.1690 (the upper boundary of the Kumo cloud on the daily chart), it would be reasonable to consider longs targeting 1.1730 (the middle line of the Bollinger Bands on H4) and 1.1760 (the upper line of the Bollinger Bands on the same timeframe).