Last night the euro was once again trying to break above 1.23, but went through a slight correction and currently sits slightly above 1.22. After breaking to the highest level in three years, EBC official comments slightly subdued the mood. Support is set at 1.20, resistance at 1.25.
Jens Weidmann, the German representative ECB’s policymaking body, said on Tuesday that it would be appropriate to end the bond purchases, which is supposed to last at least until September. Analysts from Morgan Stanley wrote in a daily note for investors tha, high Euro ratings will be tolerated by the ECB as long as the inflation and growth remain strong.
However, the rate of growth of the European currency, more than three percent during the first two weeks of 2018 caused comments from the ECB’s representatives, raising some concerns and causing a slight correction. In an interview given to the Italian daily La Republica, the vice-president of the European Central Bank, Vitor Constancio said that he did not rule out the situation in which the bank’s monetary policy would continue to be “very accommodative for a long time”.
Although the dollar index has rebounded to 90.50, analysts expect that the dollar will weaken in the long term, because markets are convinced that the monetary policy of banks around the world will be heading towards normalization. The pressure on the dollar is also pressured by low inflation growth.
Pic.1. EUR/USD chart.
The EUR / USD pair underwent a slight correction, but it is still not far from the highest level in three years. Today we’ll see CPI numbers in the euro zone, and a good reading may be supportive for the euro. The data on industrial production in the US, which may support the dollar, will also be important.