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At their January meeting, the ECB left the three rates unchanged: the base reference rate at 0.0%, the rate for deposits at -0.40% and the ECB lending rate at 0.25%. The QE program was also left unchanged at 80 billion euros per month until March of this year and from April to December 2017 this figure will be set at 60 billion euros per month.

Market expectations:

The euro rose as part of a technical movement to 1.0677 and then fell to 1.0589 during Draghi’s press conference. The ECB chief noted that the lack of an upward trend for inflation and didn’t write off extending the Bank’s QE program. After Draghi spoke, the price restored to 1.0669.

In Asia the euro rose to 1.0694. The dollar is down on the inauguration day of Trump, although a rise in the yield of US bonds will see the currency strengthen. With such contradictions, it’s worth expecting fluctuations in various directions on the market. There is no important macro data coming out of Europe today, so the euro should fall to 1.0642 from 1.0678, with a subsequent growth to 1.0683.

Day’s news (GMT+3):

  • 10:00, German December producer price index;
  • 12:30, UK December retail sales;
  • 16:30, Canadian December CPI core retail sales and retail sales for November;
  • 17:00, FOMC member Harker to speak;
  • 17:30, Trump to be inaugurated.

Technical analysis:

Euro/ rate on the hourly. Source: TradingView dollar

Intraday forecast: minimum: 1.0642, maximum 1.0694, close: 1.0683.

During Draghi’s speech on Thursday, the euro dropped by 112 degrees from a maximum of 1.0720 and by 67 degrees from a maximum of 1.0677. At the present moment in time the price has restored by 90 degrees. 67 degrees has been exceeded, meaning that growth could strengthen to 112 degrees as a saw. Now it’s worth being vigilant. Before trade opening in Europe or at opening, we could see a test of 1.0703.

In my forecast I’ve considered a fall in the rate to 45 degrees at 1.0642, with a subsequent revival to 1.0683. With yesterday’s V shape pattern it won’t be easy to continue the growth with no news. We should also keep an eye on the news coming out of the US. Trump opponents will try to disrupt the inauguration.

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