EUR/USD Mixed in the Aftermath of CB Activity
EUR/USD
The common currency does not react to Eurozone's Consumer Price Index which steadied at 4.9% y/y in November, while on a monthly basis it eased to 0.4%, from 0.8% in October.
This week's main events though, were the monetary policy decisions from the US and the European central banks.
The Federal Reserve announced a faster tapering of its Quantitative Easing (QE) program and its staff projections point to three rate hikes within the next year.
The ECB yesterday announced a timid tapering, as the 2020-launced Pandemic Emergency Purchase Programme (PEPP) will be discontinued from March 2022, but the preceding Asset purchase programme (APP) will be ramped up from current €20 billion/month.
It will run at pace of €40 billion/month in the second quarter and €30 billion in the third quarter. From October onwards, purchases will be maintained at 20 billion euros, for as long as necessary to reinforce the accommodative impact of its policy rates.
The Fed's hawkish pivot was largely priced-in and the ECB's balancing act was supportive for EUR/USD, allowing it to register a two-day advance. Over the last few weeks, it has managed to contain the October-November drop, but it is clear that it struggles to make progress. Furthermore, the policy differential remains unfavorable.
Past Performance: Past Performance is not an indicator of future results.
The technical outlook is little changed and the pair lacks firm direction today. Above the EMA100, it can push for fresh December highs and the 1.1380 area, but daily closes above it will be required for a larger recovery towards and beyond 1.1397.
Despite heading towards a profitable week, the common currency does not yet inspire confidence, with the broader downtrend still in place. As such, risk for a return back to the mid-1.1200 persists, although new 2021 lows (1.1184) may prove elusive for now.
Past Performance: Past Performance is not an indicator of future results.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
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