Daily Forex Market Preview, 12/01/2018
The ECB meeting minutes from the December monetary policy meeting released yesterday came with some hawkish surprises. According to the minutes, ECB officials discussed about tweaking its forward guidance during the coming months, depending on the economic data.
The markets reacted with the euro being bid higher on the day, halting a three day losing streak. The U.S. dollar was already weaker from the previous day as news about the BoJ’s tapering on the long term bond yields had sapped the strength out of the U.S. dollar, which was showing signs of recovery.
On the economic front, data from the U.S. showed that producer prices fell for the first time since August 2016. Headline PPI declined 0.1% on the month, while core PPI was also weaker declining 0.1%. Both data points missed the economists’ forecasts and posted a drag following a 0.4% and a 0.3% increase previously.
Looking ahead, the consumer prices data will be coming out and the market forecasts are already pointing to a weaker pace of increase in consumer prices. Retail sales numbers will also be coming out at the same time.
EURUSD intra-day analysis
EURUSD (1.2048): EURUSD posted a strong reversal yesterday as price action broke past the 1.20 handle convincingly. Any declines could now be limited to the 1.20 level which could act as a technical support. The familiar resistance level of 1.2090 remains the upside target. However, in the event that the U.S. CPI data will surprise today, the common currency could be seen giving up the gains, as the downside target at 1.1900 remains to be tested for support.