Wall Street started a sell-off and the SP500 lost 1.54% yesterday. Today, indices in Asia joined: Japanese Nikkei225 with falls of 2.84% and Chinese Shanghai Composite which drops 0.7%.
Risk aversion and declining indices drive the strengthening of JPY - USD / JPY decreased to 111.90. The decision of the Bank of Japan went unnoticed - the bank kept the parameters unchanged, as well as the content of the statement.USD gained more against the risk currencies - NZD, AUD, CAD - but the situation looks different in relation to EUR.
On Thursday, the 20th of December, the event calendar is busy with the importnat data releases, but the event of the day is the Bank of England Interest Rate Decision, posted together with Asset Purchase Facility and Monetary Policy Summart at 12:00 am GMT.
EUR/USD analysis for 20/12/2018:
The Fed, in line with expectations, raised the target for the federal reserve rate by 25bp, and several dove comments appeared in the commentary and forecasts, among others lowering the number of forecasts for the next year from three to two. However, the congruent result of the meeting proved to be insufficient to give the markets a reason to recover from the last nervousness. There was speculation on the market that the Fed must be more dovish, which has not materialized and has consequences: the stock market is getting worse, but for USD it has no definite answer.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. EUR/USD after the initial sell-off to 1.1365 now returns above 1.1400 level after a bounce from the support at the level of 1.1363. The momentum indicator is pointing upwards as well and is still above its fifty level, so it is positive and strong. The market conditions are currently overbought, so a short-term horizontal cycle might develop soon. The key technical resistance is seen at the level of 1.1442.