EUR/USD fate tilts on Wednesday’s FED meeting

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EUR/USD fate tilts on Wednesday’s FED meeting

Dithered EUR/USD hanging on, botched to provide any decisive directions

  • As the European Central Bank December Policy meeting deduced GDP and Inflation forecast, a risk of downside dwindling has been back on the track.
  • In the face of a relatively silent Eurozone week, political issues and FED might mitigate EUR downward risk
  • Despite Euro’s downtrend momentum and a bearish outlook over the market place, a lag in US FED’s monetary policy could jumpstart a solid move towards its initial key resistance at 1.1440.

The latest ECB meeting has been declared a slight adjustment of the Central bank’s GDP alongside, inflation forecast, which has not been actually an apparent cause of distress for EUR, as it has been surfing well above 1.1340 and the market outlook appeared to be neutral, ahead of a relatively quieter Eurozone week.

The Eurozone GDP forecasts for 2018 & 2019 had been reduced by one tenth to 1.9% and 1.7% subsequently and the Eurozone inflation forecasts had been tilted towards the opposite directions, which is highly unlikely to offer any key directive for Euro.

While this report is being written, the 17thof December, GMT. 14.00, the Euro has been on the green and reigning prepotently at 1.1340, holding on to its key support, while a FED’s monetary policy change, on the 19thof December, might jolt it above initial key resistant level at 1.1445.

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As ECB had been becoming more concerned over the political issues, Draghi’s recent comments mostly highlighted the tightened economic growth and tremulous political surface, almost all over the world.

Followed by the recent ECB meeting, Mario Draghi had been quoted saying that, the balance of risks to the growth outlook had been moving to the downside, triggering a certain level of uncertainties related to the geopolitical factors. He also indicated the threat of protectionism, financial market volatility and emerging market’s vulnerabilities, altogether affecting the Eurozone outlook.

EUR/USD daily price chart

EUR/USD daily price chart

Despite inconclusive comments from the ECB president, EURO appeared to be hanging on a tangible balance, holding on to its key support levels, despite growing political tension over the French and Italian budget, as France might follow the Italy’s footstep regarding the budget issues, adding further repercussion to the Euro price.

Bottom Line

As the divergent Euro had been resurfaced again on the green, despite global scale worries regarding tightened economic growth and poor economic data from all over the world including China and Germany, EUR/USD pair had chiefly been clinging on to the potential market bias.

The US FED is highly unlikely to hike rate again on its upcoming year-ending meeting, on the 19thof December, Wednesday, Euro might have rushed in to the 1.400s in a couple of days and had the FED chair been dovish as he was before, Euro gain might breach its key sentimental barrier of 1.1500s.

On the flipside, negative data from France regarding its budget might slightly affect EURO, however, a downstream move have not been yet on the cards, and buyers should cease the opportunity, market has presented for the EUR/USD pair, despite it had been the weakest currency last week, souring against almost all of major currencies except NZD and GBP.

Read more on GBP/EUR technical outlook here

[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]

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