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Market Updates

12 Dec. 2017

EUR/USD- The bulls & the bears awaiting further catalysts!

This week the 3 major central banks’ monetary policy meeting will be closely watched by the bulls & the bears for further catalysts on the forex market.

Starting as from Wednesday 13th Dec. in the United States, where the Fed is widely expected to raise interest rate for the third time this year by 25 bps to 1.25-1.50 %.
However, markets will most probably pay a close attention to the update “dot plot” that shows the rate hike projection of each individual FOMC members. Any signal to hike rates three more times than two next year would possibly set the stage for a bullish rally in the U.S dollar before year end.

In addition to that, the news that the President Donald Trump would unveil the long awaited Tax reform policy on Wednesday is most likely to catch most attention on the greenback.

On Thursday, in Europe, the details of the Quantitative Easing tapering plan of the European Central Bank in its policy statement would be scrutinized, though market do not expect the ECB to make any changes to its policy stance at the meeting, following the decision last month to extend the QE programme for another nine months in 2018.

The Bank of England monetary policy will also take centre stage in European session on Thursday. However, further upside on the Pound is likely to be limited, especially after the BOE delivered a dovish rate hike last month.

Technical Outlook on the EUR/USD.

The Single currency has been on the back foot over the last few weeks tumbling from a high of $1.1957 on 27th Nov. to as low as $1.1728 on last Friday, with no clear catalyst behind the late backdrop on the EURO.

On the hourly chart, in Elliott wave perspective, the decline on the EUR/USD is still looking corrective (a zig-zag pattern) with only three waves retracement as at now, suggesting that the bulls might take control again. However, the euro would need to make a decisive break above $1.1940 to potentially drive the pair higher to $1.2135 followed by $1.2385.

On the other hand, a close below $1.1711 would unleash the bears for further slippage back to $1.1550 (7th Nov. low).