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2019 target before the ECB meeting



EUR / USD extends the advance of the previous week as chairman of the Fed Jerome Powell endorses a wait-and-see approach to the Congress, andRecent price action brings the highest monthly (1,1489) on the radar while the exchange rate follows the range from the beginning of this year.

Image of the total assets of the Federal Reserve

The remarks prepared for the half-yearly testimony suggest that the Federal Open Market Committee (FOMC) will continue to change its tone in the coming months due to the slowdown in China and Europe, and that a growing number of Fed officials are may be more willing to reduce the $ 50B / month in quantitative tightening (QT) as President Powell declares "The Committee can now evaluate the appropriate timing and approach for the run-off."

The comments put more emphasis on the March 20 interest rate decision as Fed officials have to update their forecasts, and it remains to be seen whether President Powell & Co. will adjust the summary of economic projections (SEP) as before. update indicate a long-term interest rate of 2.75% to 3.00%.

Image of the ECB interest rate

Prior to the FOMC, the European Central Bank (ECB) will make its next interest rate decision on March 7th. The Governing Council should retain the current policy while the central bank is struggling to fulfill its unique mandate of price stability. In turn, the President Mario Draghi & Co. could show greater willingness to further support monetary union as part of ongoing discussions on a new series of Targeted Long-Term Refinancing Operations (TLTROs), and the ECB could introduce a more accommodating In the coming months The Council is in no hurry to remove the zero interest rate policy (ZIRP).

Until then, the range from the end of 2018 remains on the radar as the Fed and the ECB subscribe to a wait-and-see approach to monetary policy, with EUR / USD risking a bigger rebound after the unsuccessful test the 2018- weak test (1,1216). Sign up and join the DailyFX analyst David Song LIVE for the occasion of discuss possible business configurations.

Daily chart EUR / USD

Image of daily chart of eurusd

The upper limit of the short-term range is at the center of attention for EUR / USD becausehe 1,1220 (retracement of 7.86%) The area provides support, with a break / close greater than 1.1390 ​​(61.8% retracement) to 1.1400 (50% extension), increasing the risk of a move to 1, 1510 (38.2% increase). The next area of ​​focus is around 1.1640 (23.6% expansion) at 1.1680 (50% retracement), followed by 1.1810 (61.8% retracement), which is largely in line with the high of September (1,1815).

For further analysis, consult the 1st quarter of 2019 Forecast for the euro

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— Written by David Song, Currency Analyst

Follow me on Twitter @DavidJSong.


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