EUR/USD analysis: all eyes turn to the ECB
EUR/USD Current price: 1.1365
- The European Central Bank is largely expected to put an end to QE, keep rates unchanged.
- Easing concerns about China-US trade relationship boosted equities.
The greenback edged lower against most of its major rivals this Wednesday, with worldwide equities in franc recovery on headlines indicating progress between China and the US on trade. The Asian giant seems willing to make concessions to the US by replacing its industrial policy. The so-called Made in China 2025, a plan to make China a leader in high-tech industries, is being revised to be more open to participation by foreign companies. And while it's a long bet yet to put in practice, surely was enough to boost the market's mood. Meanwhile, the Italian PM Conte presented EU's Juncker a revised 2019 budget plan with a target deficit of 2.04%. The Italian budget drama is close to an end.
The macroeconomic calendar caused no startles, as US November inflation met the market's expectations, with the yearly reading down to 2.2% from 2.5% previously, still above the Fed's benchmark of 2.0%. The fact that inflation didn't change monthly basis, added to the dollar's intraday decline. This Thursday, the ECB will have a monetary policy meeting, largely expected to put an end to QE and keep rates unchanged. The central bank has said that rates will remain unchanged at least until next Autumn, and for how things developed lately, chances are more of a dovish stance, than of Draghi & Co. announcing a faster pace of tightening.
The EUR/USD pair bounced from the daily ascendant trend line coming from the yearly low, this Thursday at around 1.1320, but stalled its recover well below the 1.1400 figure, half-way inside the symmetrical triangle that comes from early November. In the 4 hours chart, the rally was contained by the congestion of directionless moving averages, still hovering around them, while technical indicators have advanced within negative levels, with the RSI having lost directional strength after nearing its mid-line, indicating limited buying interest. The pair could advance up to the 1.1420/30 price zone on a hawkish ECB, but sustained gains beyond the critical 1.1460 resistance area seem quite unlikely, as there are no real reasons for the EUR to appreciate that much.
Support levels: 1.1320 1.1290 1.1255
Resistance levels: 1.1380 1.1425 1.1460
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
