Should we expect further growth of the euro?

In recent days, the course of the single European currency has received significant support and added to the US dollar. This was facilitated by the expectation of the ECB's decision to stop the European economy support program this month. Some certainty regarding the Brexit issue amid the promising softer monetary policy announced by the Fed following the regulator's meeting for the next 2019.

Since the end of October, the main currency pair has moved in a well-defined range of 1.1270-1.1460 with the exception of short-term price "shots" up or down. This dynamic was provided by a number of reasons. First and foremost was the uncertainty in the matter of reaching a compromise between Brussels and Rome on the country's budget. The risks of this process amid rising yields of Italian government bonds put pressure on the euro, which was already aggravated by the lack of clarity in reaching an agreement on Brexit between the European Union and the United Kingdom. As soon as the budget problem was resolved and it became clear what threatens the exit of Britain from the EU, the euro received support and even tried to break out of the above range on Thursday.

The single currency was also helped by the local weakening of the US dollar against the backdrop of expectations that the Fed may stop raising interest rates under the influence of signals about weakening economic growth in the third quarter, as well as stabilizing inflationary pressures and risks of a further fall in national economic growth. However, the American regulator adjusted its plans for the next year, informing that it was going to raise the rates on the promised of three but only two times, on the whole, continued to be optimistic about the situation in the country's economy and its prospects. This put pressure on the single currency through falling demand for risky assets in world markets.

Evaluating the emerging picture on the eve of the Christmas and New Year holidays, we believe that the EUR/USD pair will most likely remain in the above range and in the future, it is unlikely to grow significantly.

Forecast of the day:

The EUR/USD pair is trading below 1.1460, remaining in the range of 1.1270-1.1460. If the price does not overcome the upper limit of the range, it can turn around and rush to its lower limit.

The USD/JPY pair is recovering against the background of closing short positions. It can grow to 111.65, but if this mark stands, one should expect a reversal of the price and the pair to fall to 110.65.