The European Central Bank, the euro symbol and the European Union logo in the foreground. Image source: Goricev Eduard © 123RF.com
The ECB Has to Become Proactive Once Again
The most important economic event that is taking place this week is undoubtedly going to be the monetary policy meeting of ECB's Governing Council, which is scheduled to take place on Thursday.
The European Central Bank did not implement any major changes or adjustments to its monetary policy stance the last time the Council convened, which is why many traders and investors would be eyeing at least partial interventions at the present rate.
These expectations are backed up by the fact that the Council had previously stated that it will examine the "new round of Eurosystem staff macroeconomic projections in December", and also that:
"On the basis of this updated assessment, the Governing Council will recalibrate its instruments, as appropriate, to respond to the unfolding situation and to ensure that financing conditions remain favourable to support the economic recovery and counteract the negative impact of the pandemic on the projected inflation path".
The initial market forecasts do not expect any changes to the Main Refinancing Rate, which is currently at 0.00 per cent. However, given the tanking consumer confidence and jolted industrial output in the Euro Area, the Governing Council is more than likely to bolster the underlying Asset Purchase Facility.
Any changes to ECB's quantitative easing programs are likely to correlate to heightened volatility for the single currency, which has experienced a considerable rally over the past several weeks.
BOC Faced with Similar Challenges
In the other monetary policy meeting of a major central bank scheduled for this week, the Governing Council of the Bank of Canada is gathering on Wednesday. The near-negative Overnight Rate is expected to be kept unchanged at 0.25 per cent.
Unlike the ECB, the BOC recalibrated the overall scope of its quantitative easing programs in late-October, which puts it in a precarious position of having to deal with downwardly revised economic conditions.
" The Bank is recalibrating the QE program to shift purchases towards longer-term bonds, which have more direct influence on the borrowing rates that are most important for households and businesses. At the same time, total purchases will be gradually reduced to at least $4 billion a week."
The Governing Council will have to decide whether the dampened epidemic conditions in the country necessitate any further interventions by means of scaled-up QE at the present rate.
US Consumer Prices Set to Grow Marginally in November
On Thursday, the US Bureau of Labour Statistics is scheduled to release the Consumer Price Index data for November. According to the consensus forecasts, the CPI is expected to grow very marginally by 0.1 per cent.
US m/m CPI. Image source: TradingEconomics.com
If these initial projections are realised, this will mark the first improvement in five months, albeit a very subdued one. The moderate growth of consumer prices is subject to the stabilising energy prices.
Headline inflation needs to grow above FED's symmetric 2 per cent target rate before the FOMC can cut the Federal Funds Rate and reduce the scope of its own QE programs.
Meanwhile, this inflationary data in the US, coupled with ECB's monetary policy decision, are likely to bolster the underlying volatility currently affecting the EURUSD. As can be seen on the 4H chart below, the pair reached a multi-year peak last week, which is why the market bears are expecting to see a minor correction soon.
The Bollinger Bands are tightening at present, which underscores diminishing levels of adverse volatility. The underlying traded volume is also diminishing, whereas the MACD indicator demonstrates a bearish crossover.
EURUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
Other Prominent Events to Watch for:
Monday – GDP q/q Japan.
Tuesday – GDP q/q EU.
Wednesday – CPI m/m in China.
Thursday – GDP m/m UK.
Friday – PPI m/m US; Michigan Consumer Sentiment in the US.
Over the past few weeks, the USD has lost nearly 800 pips against the JPY, driven by Japan's shift away from decades of negative interest rates. With the Bank of Japan raising rates for the second time in a row, investors are adjusting their positions to [...]
Despite its volatility, Silver remains in an uptrend. While not as dynamic as Gold, XAG often mirrors XAU’s movements. A Multiple Top has formed around $32.50, and history shows that the more a level is tested, the weaker it becomes, increasing the likelihood of a [...]
A combination of factors, including Trump-era tariffs, the emergence of DeepSeek, and a slowdown in GDP growth, has contributed to the recent pullback in the US30 from its record highs. From a technical standpoint, a Double Top pattern has formed around the [...]
Over the past month, Silver has experienced an impressive 13% surge, marking a strong bullish trend. Despite notable volatility and multiple pullbacks, the overall momentum remains firmly to the upside. This strength is further validated by the Golden Cross, a historically reliable [...]
The Swiss Stock Market has been on a remarkable rally, surging over 15% between December and January. At times, the price action resembled a near-vertical ascent. However, following the announcement of Trump’s tariffs over the weekend, Monday’s trading session opened with a [...]
Between October and January, GBPUSD experienced a significant decline, dropping by approximately 1300 pips. However, we now observe signs of a potential trend reversal. Over the past few weeks, the pair has rebounded by more than 400 pips, shifting momentum toward a [...]
For the past 1 month, the UK100 saw a fantastic 600 point rally! The occasional corrections only attracted more buyers, which is healthy for the current up trend and the RSI currently exhibits elevated demand. A 130 point correction started last week on Friday, dipped below the [...]
Over the past two weeks, Japan’s leading stock index surged 2,000 points, reflecting strong bullish momentum. However, this week saw a sharp sell-off, erasing nearly all gains since mid-January. Despite this drop, the decline stalled at the 61.8% Fibonacci retracement, a key [...]
There is a clear shift in the momentum in the Oil market, with the commodity dropping with nearly 10% for the past 2 weeks. The Death Cross, a classic sell signal, is indicating that sellers are indeed in control and we are lookin now at a strong [...]
The 350 pip rally for the past 2 weeks seems like a trend reversal for EURUSD, with buyers back in control. The strong bullish momentum is also confirmed by the Golden Cross, a historic buy signal. Corrections are healthy for the trend and we currently looking at [...]
For the past 2 weeks GBPUSD went up with 400 pips and this is why we believe we might be looking at a trend reversal. The strong bullish momentum is confirmed by the Golden Cross, a classic buy signal, which supports the hypothesis that [...]
The Death Cross formation in USDJPY signals a robust downward momentum, with the USD depreciating by 300 pips over recent weeks. Further declines exceeding 300 pips are anticipated, potentially reaching the 152.00 level. Despite several corrective pullbacks, the price has been unable to surpass the [...]
Following the formation of a Double Top pattern at the 21,930 level last Friday, the NASDAQ has experienced a significant decline, plummeting by nearly 800 points. This downturn has been primarily driven by unfavorable manufacturing data emerging from China, alongside the Bank of Japan's interest rate hike on Friday. The market reaction closely resembles the [...]
GOLD's uptrend has regained strength, with several factors supporting further gains. The RSI bounced from oversold levels and now stands at 65, signaling growing demand and increasing buying volume. Additionally, the appearance of a [...]
For the past few months, USDJPY gained 2100 pips! Then, about 10 days ago the USD started dropping and so far corrected with 300 pips, dropping down to 155.00. A local Double Bottom got formed and this level also aligns with the important [...]
For the past week, the US100 has surged by over 1,000 points, signaling strong bullish momentum. The RSI stands at 69, indicating high demand and buyer dominance. A bullish Golden Cross pattern has emerged, confirming the upward trend. Despite a brief correction yesterday, with the index dipping to [...]
The Descending Triangle on the 4-hour chart, typically a bearish signal, failed to materialize this time. Instead, the Triple Bottom support at 92,000 held strong, driving significant buying volume. A Golden Cross—a classic bullish indicator—confirms strong [...]
After a 300-point correction from its December highs, the SP500 appears to be rebounding as bulls regain control. This recovery is supported by positive economic data, including strong NFP numbers, low unemployment, and CPI readings meeting expectations—all favorable for stocks. Additionally, the earnings season began yesterday with [...]
For several months, the EUR has been trending downward, losing hundreds of pips. While occasional corrections to the upside occur, bears remain in control. The strong downward momentum is highlighted by the Death Cross pattern, a classic sell signal. Yesterday, we observed another [...]
The Dollar remains strong, with buyers firmly in control since the Fed's December comments hinting at fewer 2025 rate cuts. This drove a 400-pip rally in USDCAD, now facing resistance near 1.4450 as early buyers take profit. Corrections are part of healthy trends, and the pair is testing support at [...]
