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EUR/USD Weekly Forecast 19 Dec 16

Good day forex traders.

Welcome to our weekly review of the EUR/USD. How was your trading for the week? I hope you managed to secure a profit.

In the previous forecast we noted that the bulls had failed to achieve a breakthrough. The European Central Bank extended it’s quantitative easing measures. The US Federal Reserve interest rate event would likely see a hike. As mentioned in our forex education article, a higher interest rate usually strengthens a currency.

Looking at the EUR/USD weekly chart above, we note that the currency pair had dipped further. The US dollar strengthened as expected!

As we approach parity with the euro currency, it is likely to see increasing bullish pressure. At this juncture, it will be crucial to observe the EUR/USD on the shorter timeframe. Any recovery may see 1.06 while further dips will need to breach 1.04 first.

As expected, the US Federal Reserve hiked the Federal Fund Rate. BBC reports ”

The US Federal Reserve has raised its benchmark interest rate by 0.25%, only the second increase in a decade. The central bank voted unanimously to raise the key rate to a range of 0.5% to 0.75%, citing a stronger economic growth and rising employment.

But the central bank said it expected the economy to need only “gradual” increases in the short term.

Fed chairwoman Janet Yellen said the economic outlook was “highly uncertain” and the rise was only a “modest shift”.”

There is also a shift from the expected 2 interest rate hikes in 2017 to 3. The US Federal Reserve published its economic forecasts for 2017 to 2019. Federal Funds rate may increase to 1.4% next year; 2.1% in 2018; and 2.9% in 2019.This is likely to create demand for the US dollar in anticipation.

Next week continues to bring us important economic data such as the German Ifo Business Climate and US GDP. Do practice proper money management. Trade safely.

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