What currencies to consider this week…
EUR/USD: forecast for Dec. 18-22
During the past week, EUR/USD tested levels above 1.1850, but then returned to 1.1800.
The main event of the week was the meeting of the European Central Bank. The regulator raised growth and inflation forecasts for the euro area, but signaled it would maintain stimulus for as long as needed. ECB President Mario Draghi sounded cautious about the prospect of inflation picking up, so clear message is that even though the economy is improving, the ECB has no plans to raise interest rates anytime soon. It discouraged buyers of the euro. At the same time, the USD hasn’t been particularly strong as well. That’s why the pair still has support and resists major declines.
European economic calendar is light: final CPI is due on Monday and German business climate will be released on Tuesday. The main market moves will be the figures from the US.
If EUR/USD manages to rise to resistance at 1.1850 and 1.1915, sellers will likely appear and a decline will follow. A break of support at 1.1700 will bring the pair to 1.1605 and 1.1580.