Eur/usd - page 527
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The mixed US data released today supported the US dollar for shortly. Anyway the EUR/USD pair is on track to close its fourth consecutive week with gains. While the pair is staying above 1.0600, the bias remains bullish.
EUR/USD Weekly Forecast January 16-20
Wednesday’s press conference from President-elect Trump dominated the currency markets, setting a precedent for politically driven market fluctuations. While there were several Fed members speaking through the week, EUR/USD traded based on expectations and a subsequent disappointment from the Trump press conference. Price action in the past week reaffirmed that political drivers will continue to steer the Dollar and as a result the majors. In the upcoming week, there are several important releases scheduled on the economic calendar but Trump’s inauguration on Friday carries the potential for a sharp increase in volatility and market participants will tend to be cautious nearing the event following Wednesday’s press conference.
There was an expectation for Trump to discuss fiscal policy on Wednesday and the Dollar rose ahead of the event as a repercussion. The President-elect focused on his exit from the Trump organization while the media concentrated on recent unsubstantiated reports that Russia had been accumulating incriminating evidence on President-elect Trump. The rally inspired by the press conference served to break EUR/USD above resistance at 1.0609 established from the NFP release in the week prior.
Ahead of the press conference, there was some uncertainty in the markets as there wasn’t a clear outline of what Trump had planned to discuss. A similar sense of uncertainty is likely to resurface in the upcoming week as the Presidential Inauguration is scheduled for Friday at 09:30 EST. The markets will be focused on Trump’s speech and once again the subject of interest will be fiscal policy.
The ECB will present their latest rate decision followed by a press conference on Thursday. The interest rate is not expected to change. The focal point for the meeting will be on the division among the Governing council that was revealed in the latest meeting minutes release. The ECB announced at their prior meeting a nine-month extension of the bond-purchasing program at a smaller pace of 60 billion Euro per month. The minutes indicated that some members preffered a second presented option of extending for six months at 80 billion Euro. The meeting minutes also indicated that some members opposed both packages and argued for a much smaller stimulus extension.
The consumer price index will be released out of the United States on Wednesday and stands to move markets as inflation continues to carry an increasingly important role in monetary policy tightening. The risk will be to the upside in the figure as a strong CPI print would reinforce prior speculation that the central bank would need to tighten at a more rapid pace than previously expected. The markets are not seriously considering a rate hike in March with the futures markets indicating only a one in four chance of a rate increase, leaving plenty of room for a repricing in the event of a stronger reading.
Janet Yellen is scheduled to speak twice in the upcoming week. Her speech last week was focused on education but both upcoming speeches involve monetary policy but. As Thursday’s speech is scheduled after US market hours, the Wednesday speech is more likely to move the markets if the Fed chair decides to clarify monetary policy intentions. Fed member Brainard will discuss fiscal and monetary policy in a speech scheduled on Tuesday. Brainard is known to be a dove and has consistently called for a slow pace of tightening, the markets will look for consistency with the recent revision in the Fed forecast for three hikes in 2017.
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At the end of the trading week, the dollar remains under pressure, continuing to digest vague news conference of elected US President D. Trump. The absence of new information about the future economic policy of the new administration makes players doubt that this year the conditions for the three Fed rate increases.
Yeah, so far Trump brings a lot of volatility and pressure for the dollar.
On the last Friday’s session the EURUSD rose with a narrow range and closed in the middle of the daily range, in addition managed the currency pair managed to close within Thursday’s range, which suggests being clearly neutral neither side is showing control.
The currency pair is trading above the 10 and 50-day moving averages should act as a dynamic supports but remains trading below the 200-day moving average that also should act as dynamic resistance.
The key levels to watch are: a daily resistance at 1.0819, a key level at 1.0666 (resistance), a daily resistance at 1.0622, the 50-day moving average at 1.0560 (support), the 10-day moving average at 1.0554 (support) and a daily support at 1.0462During the European session the EUR/USD pair fell to 1.0578, mostly due to hard Brexit fears. Later on the pair returned back above 1.06 mark, as the single currency was well supported by Euro Zone’s trade figures.