EURUSD: Buyers Target 1.2178 Resistance

The EURUSD pair trended higher on Thursday, December 10, with the euro rising 0.46% against the dollar to 1.2134. The price action started heading north right after the European Central Bank (ECB) announced the results of its December meeting.

The ECB kept the interest rate on the main refinancing operations, the deposit facility, and the marginal lending facility at 0.00%, -0.50%, and 0.25%, respectively. The Pandemic Emergency Purchase Programme (PEPP) was expanded by EUR 500 bln to a total of EUR 1.85 trln.

Christine Lagarde said at a press conference that the ECB expects Eurozone GDP to contract by just 7.3% in 2020 (-8% was predicted earlier), while 3.9% expansion is expected in 2021 and 4.2% in 2022. She complained that uncertainty remains high, whereas business investment is low. In addition, strength of the euro is pushing down prices.

The single currency fell from its intraday high of 1.2159 to 1.2111, but retraced to 1.2145 by the close of the North American session. The euro drew support from the main cross, EURGBP, which jumped 1.29% to 0.9126.

The British pound weakened against the US dollar amid Brexit uncertainty. Sunday will be the deadline for London's negotiations with the EU. Negotiators are still unable to overcome the key sticking points.

UK Prime Minister Boris Johnson has warned business and the public to prepare to leave the EU without a trade deal.
Today’s macro agenda (GMT+3)

11:00 UK: BoE Bailey speech

13:00 EU: summit of EU leaders

16:30 US: PPI (November); 18:00 Reuters/Michigan consumer sentiment (December)

21:00 US: Baker Hughes weekly oil rig count


Current outlook

The dollar has been trading in the red against all major currencies in Asian trading. The Australian dollar still tops the leaderboard (+0.41%). Cable also pared some of its losses after yesterday's decline to 1.3245 despite ongoing Brexit uncertainty.

At the time of writing, the euro was trading at 1.2159, near the December 4 high of 1.2178. The outlook for cross pairs is mixed, so it makes sense to keep an eye on the main EURGBP pair, which could retrace to a high of 0.9142. As the cross moves higher, the euro could climb to 1.2175. However, that step up would require positive news flow.

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Disclaimer: Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial ...

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