ECB Tapering Expectations Make Euro Remain Bullish

Euro CurrencyGreenback continues to remain subdued against its opponents for the past five months, and the main reason behind this is the weak inflationary pressure in the United States. Notably, the poor performance of United States Dollar against the Euro is considered noteworthy.

Even those analysts who speculated about the rally in the EUR/USD currency pair did not anticipate the Euro currency to move up this far. The currency pair has risen from 1.0600 levels to 1.1850 levels within a time span of 5 months.

While the speculators who believe the Euro has risen against US Dollar, sure signs show the current rally extension and the same is discussed below.

The United States regulators think that the inflation would become normal quite soon, but there are no concrete signs of the same. In addition to this, the tension between North Korea and the USA has subsidised temporarily. In addition to this, matters pertaining to debt ceiling debate which is going to be held in September has been complicated due to declining approval rating of President Trump. In Euro Zone, the upcoming events support a further rise of currency Euro.

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ECB is widely speculated to start tapering the bond purchase program in December. JP Morgan anticipates the ECB to trim down asset purchases to an amount of 40 billion Euro for three months, commencing in December. The Euro will turn to consolidate against the US Dollar if there is an announcement related to tapering.

There has been an improvement in Eurozone economy which is confirmed by IHS Markit’s PMI data reported on Wednesday. There is an increase in flash manufacturing PMI reading from 57.4 in August as compared to 56.6 in July. Also, it is more than the expectations of the analysts of 56.3. However, the US new home sales data is not considered to be quite impressive.

As per the Census Bureau, there has been a decline of 9.4% to 571,000 units in new home sales in July from the figure of 630,000 units earlier in this month. The economists have predicted the home sales to rise by 0.3% to some 611,000 units. It is to be noted this is the most significant drop in percentage since August last year. Because of the seven months low figure, there are rising concerns about the hike in Fed rate in this year.

If you look at the historical price chart, you will see that the currency pair EUR/USD is showing firm support at 1.1780. The stochastic RSI indicator is on the higher lows while the currency pair is trading above 50-period exponential moving average. Hence, based on the underlying bullishness and strong support, we believe the EUR/USD currency pair to rise high in the coming times.

EURUSD Pair August 25th 2017

EURUSD Pair August 25th, 2017

At this point, it would be ideal to take a LONG position in the FX market. One should enter near 1.1780 and profits can be booked near 1.2080. A stop order below 1.1640 can be placed to minimise risk.

Similarly, call option would be the smart contract if one intends to make a profit from this predictable upswing in the currency pair. An entry near 1.1780 and expiry period around 3rd September are two essential things to keep in mind while entering into the trade.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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