FX.co ★ Forecast for EUR/USD on December 17, 2020

EUR/USD

The FOMC Fed meeting closed yesterday without any changes or important announcements for investors. Fed Chairman Jerome Powell drew attention to the slowdown in the recovery of the labor market, the continued depression of inflation. Also, Powell pointed out the problems around vaccines and vaccinations. In our opinion, this is the most important moment in Powell's speech, but the markets did not quite understand it (at least they didn't last night). The fact is that over the past two months, the trend towards strengthening counterdollar currencies was largely due to expectations of an early registration of vaccines, the start of vaccinations, etc., that is, on an increase in risk appetites. But the effect of general vaccination, even if it is positive, will only have an effect in two quarters, and in fact, it may only be reflected in economic indicators in the third quarter of 2021. It is interesting to note that the stock markets were not optimistic - the Dow Jones index did not grow by the end of the day, retaining the depressed mood - a decrease of 0.15%.

The risk of a reversal in the euro remains. The price divergence with the Marlin oscillator continues to form into a clearer structure, the price may rise above the target level of 1.2230. Surpassing this level while also sustaining growth will bring the price to the 1.2330 level (near the October 2008 low). The euro's reversal on the divergence may coincide when Brexit talks fail again next week, but we are waiting for the development of events.

The situation on the four-hour chart does not complete the main picture. The price is staying in an upward trend with no signs of a reversal until the end of the week.