A number of the EUR pairs look like they may be rolling over, one with the most potential could be the EURJPY. The pair had a good run up from the September low around 112.00 to a recent high at 116.30. The pair retraced to the 23.6 and 38.2 Fibonacci levels last week as the 20 & 50 DMA and the 50.0 Fibonacci levels provide support around 114.00-114.12. A breach and break of this level will could see a fall to Target 1 at 113.00 and Target 2 at 112.00, both psychological round numbers and multiples of the 14 day ATR which is currently 107. This move would be in line with the longer term Weekly and Monthly time frames.
Thursday this week remains key for the EURO this week. With growth indicators suggesting ongoing momentum and inflation starting to move higher, the ECB clearly is reluctant to add even more stimulus to an already very expansionary policy. Still, in order to keep the current program on track and to allow for a follow up program even at reduced levels, the ECB has to address the issue of dwindling supply. After the central bank tasked committees with examining tweaks to the program Reuters sources suggest that first proposals may already be discussed at this week’s meeting, but it seems more likely that any changes will be announced in December, when the decision about QE, which currently is set to end in March next year, will also be on the agenda. So, the most likely scenario is an unchanged policy stance and a pretty uneventful press conference with the ECB repeating its calls on politicians to step up structural reforms in order to boost the Eurozone’s growth potential and help to bring up inflation.
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