EUR analysis 13.12.2019

The single currency, the euro, rose during the Asian session to witness its highest level since last August 13, and was preparing for its second consecutive weekly gains against the US dollar on the threshold of developments and economic data expected on Friday by Germany, the largest economy in the euro area, and the US economy, the largest economy in the world.

At 05:19 am GMT, the euro pair rose against the US dollar by 0.37% to 1.1171 levels compared to the opening levels at 1.1130, after the pair achieved its highest level in four months at 1.1199, while achieving the lowest during the trading session at 1.1129.

Markets are awaiting for the largest Eurozone economies, Germany, which issued a reading of the price index of wholesale stocks, which may reflect a 0.5% increase compared to a decline of 0.1% in October, and this comes hours after the end of the activities of the European Central Bank meeting, which approved the monetary policy makers at The European Central Bank maintains interest rates at their current zero levels and stabilizes the marginal lending rate at 0.25%.

The European Central Bank also kept the interest rate on deposits negative -0.50%, while moving forward with the quantitative easing program of 20 billion euros per month that was activated last November, as long as it was necessary for that, and we would like to point out that the European Central Bank governorate Christine Lagarde Yesterday at the press conference held after the meeting, I expressed the fact that the European Central Bank will begin a comprehensive strategic review next month.

On the other hand, investors are currently awaiting by the US economy the disclosure of the retail sales reading, which represents about half of consumer spending, which represents more than two thirds of the gross domestic product of the United States, which may reflect the acceleration of growth to 0.5% compared to 0.3% in October, as well as A substantial reading of the same indicator may show that growth accelerated to 0.4% compared to 0.2% in October.

This comes in conjunction with the release of the import price index, which may indicate a 0.2% increase compared to a 0.5% decline in October, while the annual reading of the same indicator may show a decline in the decline to 1.2% compared to 3.0% in the previous annual reading of October, And that is before we witness the disclosure of the business inventories reading, which may reflect 0.2% growth versus stability at zero levels last September.

It is noteworthy that during the meeting of the Federal Open Market Committee December 10-11, the Federal Reserve monetary policy makers kept short-term benchmark interest rates between 1.50% and 1.75% for the second meeting in a row, while revealing the expectations of the Federal Market Committee. Open to 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 the press conference held on Wednesday following the meeting’s activities that it is possible for the Federal Reserve to expand activities Purchase short-term treasury bills if necessary to increase liquidity in the banking system.

We would like to point out that the Treasury Department launched a program to purchase treasury bills in the amount of $ 60 billion per month in October. This program is expected to continue until the second half of 2020, which aims to provide liquidity after interest in repo operations during September expanded to 10%, which paid Federal Reserve to carry out repo operations during the past two months, and these operations are the purchase of bonds and short-term debt from banks and hedge funds.

Technical analysis

The euro against the dollar traded a strong rebound with the opening of today's trading to succeed in touching our first awaited target at 1.1180 and stabilizing at it now, and by looking carefully at the chart, we find that the price drew a double bottom pattern, the level of its confirmation at the mentioned target, which means that penetration of this level It will form a strong positive stimulus that supports the chances of the bullish wave extending in the short and medium term.

Therefore, we expect the bullish trend to continue during the upcoming period, noting that the next target is at 1.1280, while the expected rise will remain valid unless the 1.1108 level is broken and stability below it.

The expected trading range for today is between 1.1100 support and 1.1280 resistance.

Expected trend for today: bullish.