The Bank of Japan held the line on Tuesday, despite predictions from many quarters they would signal an intention to take their foot off the accelerator as reported here.
In fact, one member called for more easing.
A similar set up is in place leading into the European Central Bank meeting on Thursday.
Despite rapidly improving economic conditions, inflation remains missing in action, giving the bank little incentive to make any changes to forward guidance. So the odds favour an upward adjustment in EURUSD following the meeting.
On Friday we get the first estimate of fourth quarter 2017 GDP growth out of the US with expectations of a number in excess of 3% annualised. Given the gloom around the dollar at the moment, a miss would drive it lower.
Management and risk description
From an Elliott Wave perspective, the Euro still displays a developing Bullish 5-Wave sequence from last November’s 1.1555 low (see Daily Chart below).
In the short term, support lies at 1.2270/1.2250, looking for rally above 1.2320 resistance onto next Targets at 1.2375 and 1.2420.
Entry: EUR/USD is today seen as a Buy at 1.2285/1.2270 (until 1.2320 resistance cleared)
Stop: 50% below 1.2250 and 50% below 1.2220 (both initially, as always)
Target: 50% at 1.2369 and 50% at 1.2413
Time horizon: Allow a few days for targets to be met
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)
— Edited by Adam Courtenay
Non-independent investment research disclaimer applies. Read more
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