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.

Free Trading Guides
EUR/USD
Mixed
GBP/USD
Mixed
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
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
Mixed
Oil - US Crude
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
Bitcoin
Bearish
More View more
Real Time News
  • #EURCHF Touches 3-Year Lows With More Scope for Downside - https://www.dailyfx.com/forex/technical/article/special_report/2020/01/16/EURCHF-Touches-3-Year-Lows-With-More-Scope-for-Downside.html
  • RT @dlacalle_IA: Buybacks need to be monitored as companies’ buyback strategies are always pro cyclical. https://t.co/DaNB1apPKL
  • The anti-risk Japanese Yen may fall if Asia stocks rally on the EU-US trade truce, looking past the Bank of Japan. Technicals seem to point towards near-term JPY strength however #Yen $USDJPY #digitaltax - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/01/21/Japanese-Yen-Prices-May-Fall-on-EU-US-Trade-Truce-Look-Past-BoJ.html?CHID=9&QPID=917702 https://t.co/EZ6bn3f9rH
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @IlyaSpivak here: https://t.co/1oeXWEsJkb https://t.co/FLjrTlG6U5
  • #EURUSD pivot points (daily) – S3: 1.0996, S2: 1.1051, S1: 1.107, R1: 1.1125, R2: 1.1161, 3: 1.1216 - https://www.dailyfx.com/pivot-points?ref=SubNav?utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Heads up traders! The Bank of Japan (#BoJ) is due at an unspecified time during Tuesday's Asia Pacific session. In 2019, the window for this event ranged anywhere between 2:39 - 3:27 GMT. Past performance is not indicative of future results #Yen $USDJPY 😁
  • The most interesting and largely overlooked net speculative futures readings comes from $USDMXN which has pushed to a record low - giving some serious pause to this tentative, multi-year wedge breakdown https://t.co/Qnpdw6BURp
  • One of the more extreme, 'shorter term' speculative futures position statuses is that for $GBPUSD: https://t.co/cHVPMcgKoY
  • Net speculative gold positioning is still hovering at net long records - a similar refusal to ease up reflected in the commodity's price ($GC_F) https://t.co/YQsDxWsLrL
  • The $NZDUSD sentiment outlook is bearish, how appropriate given that prices recently took out a near-term rising support line from November ahead of this week's NZ CPI report. To learn more about this tool, join me on Wednesdays at 1:00 GMT here #NZD - https://www.dailyfx.com/webinars/998956395?CHID=9&QPID=917702 https://t.co/QN7G4MW2Mu
Euro Rate Outlook Hinges on CPI, Lagarde Testimony

Euro Rate Outlook Hinges on CPI, Lagarde Testimony

2019-12-01 01:00:00
David Song, Currency Strategist
Share:
EURUSD 2-Hour Price Chart

Euro Talking Points

Fresh developments coming out of the Euro area may curb the recent depreciation in EUR/USD as the European Central Bank (ECB) tames speculation for additional monetary support.

Fundamental Forecast for Euro: Neutral

EUR/USD struggles to preserve the rebound from the monthly low (1.0989) as the United States Trade Representative is in the process of completing its investigation of France’s Digital Services Tax (DST), and budding fears of a trade war may drag on the Euro amid the weakening outlook for the monetary union.

In response, the ECB may keep the door open to further support the Euro area as the Governing Council stands “ready to adjust all of its instruments, as appropriate, to ensure that inflation moved towards its aim in a sustained manner.”

However, updates to the Euro Zone Consumer Price Index (CPI) may encourage the ECB to retain the current policy at its last meeting for 2019 as the headline reading is expected to widen to 0.9% from 0.7% in October. At the same time, the core rate of inflation anticipated to show a similar dynamic as the gauge is projected to increase to 1.2% from 1.1% during the same period.

In turn, the ECB may largely endorse a wait-and-see approach on December 12 as the central bank insists that “more information would be needed to reassess the inflation outlook and the impact of the monetary policy measures.”

ECB Interest Rates

Moreover, the account of the October meeting emphasized that “it was important to fully implement the September monetary policy decisions, and the comments suggest the Governing Council will stick to the sidelines for the foreseeable future the central bank reiterates that “governments with fiscal space should act in an effective and timely manner.

As a result, ECB President Christine Lagarde may call upon European lawmakers to provide fiscal stimulus as the central bank head is scheduled to testify in front of the European parliament on December 2.

With that said, an uptick in the Euro Zone CPI along with a batch of less dovish comments may generate a bullish reaction in EUR/USD, but the diverging paths with the Federal Reserve fosters a bearish outlook for the exchange rate as Chairman Jerome Powell and Co. moves away from its rate easing cycle, while the ECB reestablishes its asset purchase program.

EUR/USD Daily Chart

EURUSD Daily Price Chart

Source: Trading View

Keep in mind, the broader outlook for EUR/USD remains tilted to the downside as the exchange rate clears the May-low (1.1107) following the Federal Reserve rate cut in July, with Euro Dollar trading to a fresh yearly-low (1.0879) in October.

The recent correction in EUR/USD appears to have run its course as the advance from the yearly-low (1.0879) fails to produce a test of the Fibonacci overlap around 1.1190 (38.2% retracement) to 1.1220 (78.6% retracement).

At the same time, the monthly opening range fosters a bearish outlook for EUR/USD amid the lack of momentum to test the October-high (1.1180).

The failed attempt to push back above the 1.1100 (78.6% expansion) handle may spur a move towards the overlap around 1.0950 (100% expansion) to 1.0980 (78.6% retracement), with the next area of interest coming in around 1.0830 (78.6% expansion) to 1.0860 (23.6% retracement).

Will keep a close eye on the Relative Strength Index (RSI) as it snaps the upward trend from September and tracks the bearish formation carried over from the previous month.

Additional Trading Resources

For more in-depth analysis, check out the 4Q 2019 Forecast for Euro

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES

News & Analysis at your fingertips.