The EUR / USD pair in Asia showed positive dynamics of movement (+ 0.25%) against the background of a weakening dollar across the entire spectrum of the market (dollar index -0.25%).
Demand for the US currency is falling after the Democrats came to power in the United States, as the new White House administration wants to significantly increase fiscal stimulus to the economy in the face of the coronavirus pandemic. Further increases in spending by the government and the Fed will increase pressure on the dollar.
During the European trading session, investors will focus on the ECB meeting and Christine Lagarde's press conference. The ECB's decision on the rate will probably not cause large fluctuations in the market, since the regulator is very likely to leave the key parameters of monetary policy unchanged. More important will be the press conference of the head of the ECB Christine Lagarde, which can send a signal to the market about further plans to adjust monetary policy. Lagarde said last week that the ECB is very closely monitoring the euro, but not targeting it. Obviously, the high euro is a problem for the ECB, but will Lagarde go to verbal interventions to weaken the euro? The ECB has a limited set of response tools, so in order to reduce demand for the euro, Lagarde may announce a possible increase in the asset repurchase program in the future.
In the US, a number of important macroeconomic data is expected today: data on construction applications for December, indices from the Federal Reserve Bank of Philadelphia and weekly data on applications for unemployment benefits.
On the chart, follow the price reaction to the level 1.2140. A downward reversal at this mark means a priority towards the development of a downward movement in order to update the local minimum at the level of 1.2050. In case of a breakdown of the resistance at 1.2140, one can expect an increase in quotations to 1.2175.
The main scenario is a decline below 1.2050 and an upward reversal.
An alternative scenario is a breakdown of intraday resistance at 1.2140, a rise to 1.2175 and a downward reversal.
The current fundamental outlook is neutral. We consider shorts with very moderate risks from the level of 1.2175.
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