EUR analysis 12.12.2019

The euro currency fluctuated in a narrow range slanting up during the Asian session against the US dollar on the cusp of developments and economic data expected Thursday by the economies of the euro area and the US economy the largest economy in the world which includes the decisions and directions of monetary policy makers at the European Central Bank and the press conference of the central European Christine Lagarde, hours after the expiry of the FOMC meeting and Federal Reserve Governor Jerome Powell's press conference.

At 05:16 am GMT, the euro pair rose against the US dollar by 0.11% to 1.1142 levels compared to the opening levels at 1.1130, after the pair achieved its highest level during the trading session at 1.1144, while achieving the lowest at 1.1129.

Markets are awaiting for the largest Eurozone economies, Germany, which issued the final reading of the consumer price index, which may reflect the stability of the contraction at 0.8%, unchanged from the initial reading of the previous month of November and against the growth of 0.1% last October, before revealing the reading The same final index is for France, the second largest economy in the region, which may reflect stability at 0.1% versus stability at zero levels.

This comes before we witness the third largest economy in the region, Italy, the release of the unemployment rate index, which may reflect a decline to 9.8% compared to 9.9% in the second quarter, and before the disclosure of the seasonally adjusted reading of the industrial production index for the euro area as a whole, which may reflect a 0.5% decline against a rise 0.1% last September, while the annual reading of the same indicator may show the widening decline to 2.4% compared to 1.7%.

Up to the ECB meeting, during which the monetary policy makers of the European Central Bank are expected to decide to maintain interest rates at their current zero levels and to fix the marginal lending rate at 0.25% in addition to staying on the interest rate on negative deposits -0.50% and move forward in The quantitative easing program at 20 billion euros per month, as long as necessary.

Markets are also looking at later in the day for the press conference of the European Central Bank Governor Christine Lagarde, which is her first press conference after she took over the post of former Governor Mario Draghi at the beginning of last month, in conjunction with the actual parliamentary elections in Britain, which may be directly reflected on the file The exit of the United Kingdom from the European Union at the preset date, at the end of January.

On the other hand, investors are currently awaiting by the US economy the disclosure of the PPI reading, which is an initial indication of inflationary pressures, which may reflect a slowdown in growth to 0.2% compared to 0.4% last October, as the substantial reading of the same indicator may show a slowdown in growth To 0.2%, compared to 0.3% in October.

In the same context, the annual reading of the producer price index may reflect the acceleration of growth to 1.3% compared to 1.1% in October, as the substantial annual reading of the same price index may indicate the acceleration of growth to 1.7% against 1.6%, and this comes in conjunction with the issuance of the demand index reading The subsidy for the week that ends on the seventh of this month, which may reflect an increase of 10 thousand requests to 213 thousand applications compared to 203 thousand requests in the previous weekly reading.

This comes hours after the FOMC meeting ends December 10-11, during which the Federal Reserve monetary policy makers decided to keep the short-term benchmark interest rates at between 1.50% and 1.75% for the second meeting, respectively. As they reveal the Federal Commission's expectations for growth, inflation and unemployment rates as well as the future of interest on federal funds for the next three years.

The expectations of the members of the Federal Committee indicated that the Federal Reserve may keep interest rates during the next year 2020 unchanged, and in the same context, Federal Reserve Governor Jerome Powell noted during yesterday's press conference following the meeting's activities that it is possible for the Federal Reserve to expand its buying activities. Short-term treasury bills if required to increase liquidity in the banking system.

It is reported that the Ministry of the Treasury launched in October a program to purchase treasury bills worth $ 60 billion per month and it is expected that this program will continue until the second half of 2020, which aims to provide liquidity after the expansion of interest in repo operations during September to 10%, which paid the reserve The Fed has been conducting repo operations over the past two months, and these are the purchase of short-term bonds and debt from banks and hedge funds.

Technical analysis

The euro against the dollar pushed up strongly yesterday evening to breach the 1.1108 level and settle above it, which turns the intraday path towards an increase again, and the path is open for a visit to the 1.1180 level as the first major station, noting that breaching this level will open the way for an ascending wave to extend The longest run is to 1.1280 then 1.1418.

Thus, the bullish trend will be likely during the upcoming sessions, provided that the price maintains its stability above 1.1108, with the need to pay attention to the fact that the pair may witness mixed trades today at the time of the European Central Bank’s interest decision.

The expected trading range for today is between 1.1050 support and 1.1250 resistance.

Expected trend for today: bullish.