Analysis by growthaces.com

(stay short, the target is 1.2400)

• European Central Bank President Mario Draghi said there was now no sign of economic improvement in the months ahead. He added: “If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialise, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases.” Draghi said further measures could involvelarge-scale purchases of government bonds, also known as quantitative easing.
• The EUR/USD fell significantly after Draghi’s speech and is close to the target of our short EUR/USD position of 1.2400.
• Let’s take a look at the economic calendar for the next week. We have German Ifo indexscheduled for Monday. Ifo index has two components: the assessment of current situation the sub-index of expectations. A slight decline in the assessment of current situation could be expected, especially given strongly disappointing German PMI release. We believe that a lot of pessimism has been already been priced in the expectations component of Ifo index. A weaker EUR and lower input prices are likely to improve slightly the expectations component.
• Another important release next week is Euro zone flash November CPI reading on Friday. It is likely to remain unchanged at 0.4% yoy. Continuation of decline in price of oil products generates a downside risk to the forecast. Core inflation is likely to stay at 0.7% yoy, unchanged from the previous month.

Significant technical analysis’ levels:

Resistance: 1.2569 (high Nov 21), 1.2589 (30-dma), 1.2601 (high Nov 19)

Support: 1.2398 (low Nov 14), 1.2358 (low Nov 7), 1.2342 (low Aug 21, 2013)

Analysis by growthaces.com