FX.co ★ Global macro overview for 16/01/2017

Global macro overview for 16/01/2017:

European Central Bank governing council member and Bank of France governor Francois Villeroy de Galhau has hit the news wires today with the interesting comments regarding infaltion expectations. According to him, inflation concerns are "greatly exaggerated" as "we (ECB) aren't even at our target of 2 percent". Moreover, he said that the acceleration in euro area inflation will be "gradual" and expects inflation rates of the euro area countries to converge during 2017. The ECB Governing Council holds a monetary policy meeting this week at Thursday, 19th of January at 12:45 pm GMT (Interest Rate decision) and 01:30 pm GMT (press conference). No change in the key interest rate is expected (0.00%), but some more hawkish members of the ECB might start to suggest a pause/termination in the quantitative easing program. Another scenario will come as a huge surprise for market participants.

Let's now take a look at the EUR/USD techncial picture in 4H time frame. The price is quitetly trading around the weekly pivot at the level of 1.0600 as the US markets are closed today. Please notice the growing bearish divergence between the price and the momentum oscillator. It suggest that the down trend should resume soon and any breakout below the golden trend line will be considered as a first clue. The next support is seen at the level of 1.0453 and the next resistance is seen at the level of 1.0670.