News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • Continuation patterns can present favorable entry levels to trade in the direction of the prevailing trend. Use continuation patterns in your technical analysis here: https://t.co/TUVnO3bO1P https://t.co/vBLkMKjf4x
  • Cyclical and non-cyclical stocks can help diversify a trader’s equity portfolio. Get your guide to understanding these stocks here: https://t.co/h7BKTd2J8N https://t.co/n8vpmuLdTW
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/CZePv1JEFh
  • The US dollar is unloved, oversold and at lows last seen over 30-months ago. At the moment there seems to be very little reason to buy the greenback. Get your $USD market update from @nickcawley1 here:https://t.co/VY3SLs35cp https://t.co/AVpY2GkGUG
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/IUii5478Jf
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears. .Get your market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/TCBkQdrMAR
  • RT @jposhaughnessy: BOOM! Mystery solved. https://t.co/njXlgejE0j
  • Gold and silver prices have come under significant pressure recently. However, this correction lower could prove short-lived as price analysis hints at a reversal higher. Get your $XAUUSD market update from @DanielGMoss here:https://t.co/K1qL0fsGwy https://t.co/pH0HQmNX14
  • The dispute between the Federal Reserve and the Treasury Department concerned economists and government officials last week. Traders, however, appeared unfazed as U.S. equity markets proceeded to higher ground. Get your market update from @FxWestwater here:https://t.co/DKK7WWHKlu https://t.co/qxKvC8FAVd
  • The British Pound is eyeing a push to fresh yearly highs against the US Dollar. However, various technical setups suggest GBP could lose ground to JPY, EUR and NZD in the near term. Get your $GBP market update from @DanielGMoss here:https://t.co/NSUnZnPb4Q https://t.co/RuBAAWS37w
EUR/USD Set to Face Neutral ECB, Even as Data Improves

EUR/USD Set to Face Neutral ECB, Even as Data Improves

2017-01-15 22:00:00
Christopher Vecchio, CFA, Senior Strategist
Share:
EUR/USD Set to Face Neutral ECB, Even as Data Improves

Fundamental Forecast for EUR/USD: Neutral

- EUR/USD traded sideways for a second week, but after trading as low as 1.0540 on Wednesday, closed the week higher at 1.0640.

- There are major events due for both the Euro (ECB rate decision) and the US Dollar (Trump inauguration) at the end of the week.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the coming days on the DailyFX Webinar Calendar.

See the DailyFX Q1’17 and 2017 Trade of the Year Forecasts

Market volatility continued to increase in the second week of the year, with EUR/USD trading higher by +1.04% to 1.0640 by close on Friday. A further deterioration in the US Dollar’s main fundamental driver – rising US Treasury yields – and ongoing improvement on the data side for the Euro kept the pair buoyed in an otherwise quiet week on the calendar. Yet the days ahead should be more interesting for traders, as the European Central Bank meeting on Thursday will be followed up by what should be an eventful US President Trump inauguration on Friday.

As for what’s directly related to FX markets and EUR/USD, the ECB rate decision will garner most attention. However, given that it is a) the first meeting after they just changed policy in December 2016 and b) that there are now new staff economic projections (SEPs) due on Thursday, the scope for the ECB to act at this meeting, one way or the other, seems very limited.

ECB President Mario Draghi is likely to balance out his optimism over near-term economic data against longer-term concerns about the political scene in Europe and inflation that remains barely positive. To be clear, economic data has been improving steadily in recent weeks, beyond consensus expectations by a wide margin. The Euro-Zone Citi Economic Surprise Index finished last week at +74.1, up from +71.1 a week earlier and up from +63.3 a month earlier on December 16. One of President Draghi’s favorite measures of inflation, 5-year, 5-year inflation swap forwards, are pushing higher as well, finishing at 1.745% at the end of last week from 1.666% four-weeks ago.

If data continues to improve, we would expect that market pressure on the ECB to back away from its most aggressive easing policies would increase. One year from now, market participants think that the ECB will be closer to a rate hike (17.5% chance at the January 2018 meeting) than a rate cut (13.4%). Yet to do so, we believe that the ECB will need to see a meaningful improvement in actual inflation readings; the latest ECB forecasts see inflation ending 2017 at +1.1%. If this proves reality, then the ECB might opt for another tweak in its policy, extending the length of its QE program but reducing the pace of purchases.

Any such announcement would come at a meeting with a new set of SEPs, which come in March, June, September, and December. Accordingly, the coming ECB meeting on Thursday may bring a lot of hype, but it seems very likely to be a rather neutral meeting that may not wing the pendulum of understanding about the ECB’s next move. If US Treasury yields take another step back, then EUR/USD could easily trade above 1.0700, which would constitute more signs of near-term basing by the pair.

--- Written by Christopher Vecchio, Senior Currency Strategist

To contact Christopher, email him at cvecchio@dailyfx.com or Christopher.vecchio@ig.com

Follow him in the DailyFX Real Time News feed and Twitter at @CVecchioFX.

To receive this analyst’s reports, sign up for his distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES