EUR/USD: driven by short-term data


What’s up?

The European Central Bank will release the minutes of its December meeting on Thursday, January 16, at 14:30 MT time. Then, the US retail sales figures will be out at 15:30 MT time. In addition, the ECB President Christine Lagarde will speak at 20:00 MT time. These events should move the EUR/USD thus proving trading opportunities.

 

Why is it important?

The new ECB meeting is scheduled for next Thursday, January 23. This event trends to draw great attention of the market. As it always happens, traders will form expectations ahead of it, and today’s release of the ECB Monetary Policy Meeting Accounts will help them to do so. Market players will look for any information about the central bank’s framework review, and, in particular, about whether the regulator plans to change its inflation target.

Currently, the ECB aims to keep inflation “below, but close to 2%”. If the minutes show that central bank members are in favor of a wider target range, for example 1.5%-2.5%, the regulator will have the official excuse not to act very aggressively, even though the inflation is low. Is so, the EUR will strengthen. If, however, the ECB decides to adopt a simple 2% inflation target, it will be able to keep rates lower for a longer period of time to achieve this higher inflation goal. As a result, the initial impact on the EUR will be negative.     

As for the US retail sales figures, the indicator will show how active US consumers were during the Christmas season. Normally, the data should be strong as people tend to buy more ahead of the holidays. The forecasts are rather good, but if the release disappoints, the USD will be hurt.    

 

The impact on the EUR

So far, the attitude towards the EUR has been quite positive: the market has focused on the positive signs from the European economy, the improvement of the US-China trade relations, and the reduction of Brexit uncertainty. At the same time, the changes for the best seen in the euro area aren’t that big. Without the fiscal stimulus, EUR/USD will be driven up by the USD weakness rather than by the EUR strength.      

EURUSD

EUR/USD has been moving up since January 10. There will be resistance at 1.1180 (October highs) ahead of 1.12 and 1.1240. Support is at 1.1137 (200-day MA), 1.1120 (the bottom of the short-term bullish channel) and 1.1105. In the short term, the upside seems to be the path of the least resistance.

 

This post is written and submitted by FBS Markets for informational purposes only. In no way shall it be interpreted or construed to create any warranties of any kind, including an offer to buy or sell any currencies or other instruments. The views and ideas shared in this post are deemed reliable and based on the most up-to-date and trustworthy sources. However, the company does not take any responsibility for accuracy and completeness of the information, and the views expressed in the post may be subject to change without prior notice.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD loses 1.1800 amid escalaing US-Sino tensions

EUR/USD dips sub-18 after the US reported an increase of 1.763 million jobs in July, better than estimated but pointing to a deceleration. Escalating Sino-American tensions are boosting the dollar and fiscal talks are eyed. 

EUR/USD News

GBP/USD resumes decline, weighed by UK concerns, US-China conflict

GBP/USD trades at fresh weekly lows below 1.3050 as the dollar got a sudden boost from mounting tensions between the world's two largest economies. UK Chancellor Rishi Sunak said the furlough scheme that is underpinning the economy cannot last forever.

GBP/USD News

XAU/USD drops $50 from record highs to the $2020 area

Gold prices are falling sharply on Friday, trading below $2040/oz at the moment. Earlier on Friday, the yellow metal reached at $2075, a new record high.

Gold News

Bitcoin may extend the recovery once Gold resumes the rally

Gold retreated from the recent highs, but the sentiments are still bullish. Cryptocurrencies resumed the upside, some altcoins are demonstrating strong gains. ETH/BTC stopped the downside correction and settled at $0.03300.

Read more

WTI drops 1% to $41.50 ahead of US NFP, rigs data

WTI (futures on Nymex) is on a steady decline so far this Friday, undermined by reduced demand for higher-yielding assets amid the renewed US-China tensions induced risk-aversion.

Oil News

Forex Majors

Cryptocurrencies

Signatures