by JustForex
Despite rising inflation in the region, the ECB is accelerating its balance sheet expansion ahead of this week’s meeting and forecasting lower inflation. Total assets increased by another 26.7 billion Euros to nearly 8.5 trillion Euros. The ECB’s balance sheet is now equal to 81.5% of eurozone GDP compared to the Fed’s 37.4% and the Bank of Japan’s 135.4%.
From a technical point of view, the EUR/USD on the hour time frame is still bearish. The price is trading in the corridor, while there is an expansion of borders in the form of false breaks. The MACD indicator has become inactive. Under such market conditions, traders should consider sell positions from the resistance level of 1.1323. Buy trades can be considered from the false breakdown zone, but only with additional confirmation.
Alternative scenario: if the price breaks out through the 1.1360 resistance level and fixes above, the mid-term uptrend will likely resume.
According to CitiBank, inflation expectations in the United Kingdom for December are 4%, and inflation will peak in the spring of 2022 at 5.5%. Today, the UK will report its inflation rate for November. Analysts expect consumer prices to rise to 4.8% (current 4.2%) in annual terms. A rise in inflation may provoke investors to buy the British pound on expectations of a future interest rate hike. The UK unemployment rate fell from 4.3% to 4.2%.
On the hourly time frame, the trend on GBP/USD is bearish. The MACD indicator is negative again. Under such market conditions, traders should consider sell positions from the resistance levels around the moving average. Buy trades should be considered from the support levels on lower time frames, but only with additional confirmation.
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Alternative scenario: if the price breaks out through the 1.3321 resistance level and consolidates above, the bullish scenario will likely resume.
The situation with the Japanese Yen remains the same. Against the background of a large-scale economic stimulation by the central bank of Japan, the fundamental outlook for the yen looks gloomy. The US central bank will hold a meeting today. If the Fed accelerates reduction of the QE program, the USD/JPY may grow sharply against the background of the dollar index strengthening.
The global trend on the USD/JPY currency pair is bearish. The price is trading in a wide corridor. The pressure of buyers is slowly increasing and the price is approaching priority change level. Under such market conditions, traders are better to look for sell positions from the priority change level, but with additional confirmation. Buy positions should be considered from the lower border of the corridor, but with additional confirmation in the form of a buyers’ initiative or after the price breakout the priority change level.
Alternative scenario: if the price rises above 114.17, the uptrend will likely resume.
Crude oil prices continue to decline ahead of the Fed meeting and because of the uncertainty in oil demand due to the Omicron strain. The Canadian dollar is a commodity currency, so the USD/CAD is rising amid falling oil prices and a rising dollar index. Canada will report on inflation today. Analysts expect inflation to rise to 4.9% (current 4.7%) in annual terms.
From a technical point of view, the trend of the USD/CAD currency pair has changed to bullish. The price is confidently growing. The MACD indicator is positive, but the first signs of divergence appear. Under such market conditions, it is better to look for buy deals from the support levels near the moving average. It is best to look for sell deals from the resistance levels of higher time frames.
Alternative scenario: if the price breaks down through the 1.2721 support level and fixes below, the downtrend will likely resume.
by JustForex
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.
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