Article by ForexTime
Despite most European nations observing a New Years Eve holiday on Thursday, the EUR/USD has experienced some negative price action on the last trading day of 2015. The currency pair is trading to the downside as momentum has turned negative. The yields differential against the greenback has moved in favor of the dollar which is providing a backdrop where the forward curve is pointing to a lower exchange rate.
The ECB’s Contancio argued against speculation over further steps in policy easing, preferring that monetary policy did not have to change in the foreseeable future. That said, he noted the ECB has the tools to reach its goals and if necessary will use them. Contancio views negative depo rates as a temporary phenomenon worldwide and not a permanent feature of normal monetary policy. On balance this is a relatively neutral view, offering few dovish hints.
Momentum on the EUR/USD has turned negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory which confirms the sell signal and points to a lower exchange rate.
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