EURUSD records a fourth consecutive daily gain after the Fed’s accommodative stance. Second German level, EU data will offer intermediate moves ahead of the ECB. Here is the EURUSD Fundamental Analysis of 12 December, 2019.
12 December, 2019 | AtoZ Markets – EURUSD has taken the bids to 1.1140 while heading into the European session on Thursday. The pair hit its highest level since early November after the meeting of the US Federal Reserve (Fed). Traders are now waiting for the decision of the European Central Bank (ECB) for a clear direction.
EURUSD Fundamental Analysis – 12 December 2019
FOMC (Federal Open Market Committee) left its monetary policy unchanged while not reporting any rate hikes in 2020. Fed President Jerome Powell cited doubts about inflation. That could have pushed the Financial Times to believe in Credit Suisse analyst Zoltan Pozsar. He said that the Fed had “tapered the balance sheet too much, too quickly. The Fed must undo that.”
Despite this, the pair’s latest gains have held back by fears of a trade war. The US deadline for the new customs tariffs on China is still on 15 December. China wishes on that day to revoke for further negotiations. To do this, the President will meet with his trade advisors today.
The general election in the UK also contributes to the risk sentiment. Major polls favor the ruling Conservative Party to keep aid from Britain. But a clear majority in Parliament is what the Conservatives need to achieve their Brexit goals. As a result, US 10-year treasury yields reached 1.80%, and the S&P 500 remained slightly positive at 3,147.
The focus will be on the first monetary policy meeting of Christine Lagarde as head of the ECB. Germany’s November month inflation and Eurozone Industrial Production for October will also be the key to watch. However, the ECB wants to change its current monetary policy but may reiterate its request for fiscal stimulus.
Federal Reserve Kept Interest Rates on Hold
The US dollar slipped on Thursday in Asia after the Federal Reserve kept interest rates on hold. But, the current course of monetary policy was “appropriate” to support economic growth and would remain probably in place throughout the next year. The US dollar index tracks the greenback against a basket of other currencies that slipped 0.1% to 97.035 at 10:02 p.m. ET (02:02 GMT).
“The Committee believes that the current stance of monetary policy is appropriate to support a sustained expansion of economic activity. Good labor market conditions and inflation close to the Committee’s symmetrical target of 2%”, said the FOMC in its press release.
In July, the Fed also cut interest rates for the first time since the financial crisis, more than a decade ago. Two further rate cuts followed the July cut.
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