The euro dropped against the U.S. dollar on Wednesday as the Fed released its interest decision. The Fed kept its interest rate unchanged, but changed its guidance language. It said that it will be "patient" before to raise its interest rate.
The central bank maintained the phrase "interest rates would remain unchanged for a considerable time", but added that it can start to hike its interest rate sooner than expected. Interest rate hike by the Fed will lead to the further depreciation of the euro. But when we will see the first interest rate hike, it's still unclear.
The Fed Chair Janet Yellen said at the press conference that the Fed's position has not changed despite different views when to raise interest rates. Yellen noted that the Fed was unlikely to hike its interest rates for the "next couple of meetings".
I suppose the Fed will monitor the economic data in the next few months in order to decide whether it's appropriate to raise interest rate or not. The recently released U.S. economic data was mixed. The labour market is improving, but the recovery of the housing market seems to slow down and a lot of manufacturing indices were weaker than expected.
A slowdown of global economic growth will also weigh on the Fed's interest rate decision.
New U.S. labour market is scheduled to be released on January 09, 2015. Positive U.S. labour market data means will put the euro under pressure toward 1.2000.
But the most awaited event in January 2015 is the next European Central Bank's (ECB) meeting. The next monetary policy meeting is scheduled on January 22. The ECB President Mario Draghi said at a press conference on December 04 that the central bank will decide early next year whether to add further stimulus measures to boost inflation in the Eurozone. The next step of the ECB's stimulus measures could be the sovereign bond purchases.
New U.S. labour market data and the next ECB's monetary policy meeting will show us the direction of the currency pair EURUSD. I think the euro will recover some of its recent losses in the last few days of these year. The euro could rise toward 1.2500.
Nevertheless, there is a "but": a parliamentary vote for Greek president. The Greek presidency candidate is Stavros Dimas. There are three possible votes in parliament. If the candidate isn't elected in three possible votes, the parliament will be dissolved. The first vote was unsuccessful.
The uncertainty in Greece could have a negative impact on the euro.
EURSUD monthly, December 19, 2014
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2022 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.