THE ECB MAY START TO TIGHTEN MONETARY POLICY SETTINGS IN 2018
The price of the EUR/USD grew sharply after the release of the minutes from the ECB meeting on monetary policy. Investors got hints of upcoming monetary policy tightening which is a positive for the common currency. The asset purchasing programme in the Eurozone has been reduced to monthly purchases of 30 billion and this kind of fiscal stimulation is expected to last until September. At the beginning of the trading session the industrial production report showed growth in the Eurozone of 1.0% for November which is 0.2% better than expected.
The EUR/USD bulls were also cheered by the decline of the producer price index in the US, which fell by 0.1% in the previous month compared to the forecasted increase of 0.2%.
The high volatility level is likely to remain tomorrow due to the publication of consumer inflation data in the US that may have a significant influence on the FOMC decision to hike interest rates which traditionally support the greenback.
The USD/JPY quotes will be influenced tonight by the macro data release on the current account balance in Japan for November at 23:50 GMT. At the same time, the trade balance in China will be released, which traditionally has an impact on the price of commodities and the Australian dollar which is dependent on the commodities it exports to the world’s second largest economy – China.
The EUR/USD grew sharply and reached the inclined resistance line and in case of its overcoming, the nearest targets will be at 1.2070 and 1.2200. The RSI on the 15-minute chart is located in the overbought zone which points to the possible price pullback with the closest potential target at 1.2000. In order to change the trend to negative, quotes need to break through the 1.1925 support line.
The USD/JPY resumed the negative movement after a slight upward correction. The nearest targets in case of the fall continuation will be at 111.00 and 110.30. The MACD signal line has changed direction and this may become the basis for an upward correction with the first objectives at 111.70 and 112.00.
The AUD/USD keeps rising along the inclined resistance line and in case of maintaining the current rising dynamics, the nearest targets will be at 0.7900 and 0.8000. On the other hand, the fall resumption and overcoming the support at 0.7800 may become a strong signal to sell with the targets at 0.7740 and 0.7635.