Market Update – January 25, 2018

Market Update – January 25, 2018

Another week, another march higher on the EURUSD pair. This was the theme for the last three months, as for November, December and now January saw bears running for the hill.

 

But it wasn’t only the EURUSD pair. Overall the USD pairs suffered, with the GBPUSD being up over 1.42. Who would have thought about this a few months ago?

 

Euro on the Run

 

If you followed the blog here, you know I’ve been bullish Euro for a long time. Actually, for a few months, calling for a steady move above 1.20.

 

Here we are, with EURUSD confirming. But, other pairs are hesitating.

 

The reason for that comes from the USD. Despite the steady tightening in the United States monetary policy, it is acting extremely week.

 

No matter what the economic data shows, the USD falls down the hill. It seems that the overall Trump’s administration policies affect it more than traders like to admit.

 

ECB to Hit the Wires

 

Tomorrow the common currency will face its real test so far in the new year. Draghi and Co. will announce the monetary policy.

 

While no one expects the ECB to hike rates, the tone might change to a slightly hawkish one. But, Draghi is a master of words, and the press conference might sound more dovish.

 

The fear is that a higher Euro will push inflation low again. Ironically, that’s not the case with higher oil prices, so those arguments pale.

 

While Draghi will recognize the improvements in the Eurozone area, he will try to downplay any hawkish comment due to the fear the Euro will overreact.

 

Conclusion

 

Despite the U.S. Advanced GDP (Gross Domestic Product) coming out on Friday, the big moves will start tomorrow with the ECB. Or, amaybe they already happened as the market tends to position itself ahead of it.

 

However, no matter the outcome of tomorrow’s ECB interest rate decision and press conference, the Euro started the year on a high note. And, if the USD will stabilize a bit, the Euro crosses might start showing their teeth. EURJPY especially.


Also published on Medium.

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