The Key Event is the ECB Meeting

The euro continues to strengthen against the US dollar. The EUR/USD quotes have reached a three-year high. At the moment, participants of the financial markets took a wait-and-see attitude. Today the ECB's long-awaited meeting will take place. The regulator will publish a report on the current economic situation and point to further plans for the monetary policy.

The ECB can become the next regulator, which will make a step towards normalizing the monetary policy. The latest statistics indicate a stable growth of the Eurozone economy. The protocol of the ECB meeting on the monetary policy from January 11 continues to support the demand for a single currency. In the near future, the Central Bank may change its rhetoric. At the same time, officials are still concerned about the low inflation. It should be noted that over the past month the euro strengthened against the US dollar by more than 5%. This is due to a sharp increase in the yield of the government bonds of Germany and the weakening of the US dollar. Some ECB representatives spoke against the strong euro when the currency reached $1.22. We do not exclude that the ECB head Mario Draghi may become more cautious.

Germany Government Bond

At the moment, most experts expect that the Central Bank will leave interest rates unchanged: the deposit rate will be -0.40%; a decision on the interest rate – 0.00%. We recommend you to pay attention to comments and rhetoric by the ECB head Mario Draghi at a press conference, which will begin at 15:30 (GMT+2:00).

The analysis of the CME exchange data (Chicago Mercantile Exchange) allowed to distinguish the option levels of major players' interest for January 05 – February 09:
  • The resistance zone – 1.2250-1.2350
  • The support zone – 1.1950-1.2050
  • The option balance level – 1.2150
EUR/USD Pattern

At the moment the EUR/USD quotes have fixed above the month control zone of 1.2250-1.2350, which indicates the power of the buyers. Nevertheless, a technical correction is possible in the near future. The key trading range is 1.23750-1.2450. We recommend you to open positions from these levels. In the medium term, the EUR/USD currency pair may turn back to the month control zone range of 1.2250-1.2350.

by JustMarkets, 2018.01.25

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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