IC Markets

Stronger Euro makes EUR/USD to Remain Bullish in Short Term

EuroAs expected, the US Federal Reserve has raised the interest rates on Wednesday. But, the US Dollar was unable to move against its opponent currencies. In fact, Greenback falls against EUR/USD, and analysts had pointed out two reasons. First of all, the market has already priced the rate hike.

The second reason is that US Federal Reserve has cautioned everyone that inflation rate would reach the target level of 2% in 2019.

In addition to above, we present facts below that show that currency pair EUR/USD which is trading at 1.1780 levels will continue to rise in the near future.

On Wednesday, in a report published by Destatis (German Federal Statistical Office), it is said that Wholesale Price Index would grow by 0.5% on the M-O-M basis in November as compared to analysts’ expectation of 0.2%. Later on that same day, Eurostat which is the statistical office of European Union submitted a report stating there is a growth of 0.2% M-O-M in industrial production in October.

In September 2017, there was a 0.5% decline in industrial output in Euro area. Thus, the analysts were not speculating for a positive change in the industrial production for October. On a yearly basis, there is a 3.7% Y-O-Y growth in the industrial production.

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While the market was waiting for the rate hike announcement from US Federal Reserve, the Bureau of Labor Statistics submitted a report talking about unimpressive inflation data in November. As compared to earlier month, there is a 0.4% growth in inflation in November which also meets the expectation of the analysts. The rising price in the energy sector is the main reason for the inflation hike.

If we exclude energy and food, there was 0.1% M-O-M growth in core inflation in November as compared to the expectation of analysts of 0.2% hike. In October, there was 0.2% increase in core inflation. The market, as well as the Federal Reserve, is concerned about the soft rise in inflation. The inflation rate needs to pick up on the market so that the US dollar can turn bullish.

Another reason for the weak US Dollar is GDP (Gross Domestic Product) growth projections for the year 2018 and 2019. According to the policy statement, the current GDP growth rate of 3% would not last and would be in the range of 2 to 2.5 percent for the next two years. Hence, these economic data presented above clearly shows that EUR/USD currency pair would remain bullish in the short term.

EURUSD Pair Dec 15th, 2017

EURUSD Pair Dec 15th, 2017

On a technical level, the currency pair is trading at the support level of 1.1740. Also, MACD Indicator is above the zero mark and continues to rise which indicates bullishness in EUR/USD pair.

Traders, if they want to make a profit from the uptrend, should invest in opening a LONG position near 1.1780 and place stop order loss below 1.1680. Profit can be taken when the currency pair is trading near 1.1920.

Also, traders are advised to buy a CALL option via any reputed broker who should have the expiry period of 1 week and should be trading around 1.1780 in spot FX market.

Steven Rudford

Steven Rudford

Hello, my name is Steven Rudford. Welcome to Top10FX.net. Follow my website for the most trustworthy Forex broker reviews and last minute financial trading news.

IC Markets

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