FXWIREPRO Longer Term Outlook: Euro Upside Could Extend Towards 1.2 Against Dollar

FXWIREPRO Longer Term Outlook: Euro Upside Could Extend Towards 1.2 Against Dollar

After last week’s big package from European Central Banks (ECB), which includes both negative rates and increase in asset purchase, also other sweeteners such as inclusion of corporate bonds in asset purchase, four TLTRO, is not enough to weaken Euro against Dollar, it is more likely that Euro will extend its gain against Dollar further.

Once a key resistance around 1.138-1.15 area successfully taken out, which might require more times, Euro is likely to extend its gains towards 1.184 area and towards 1.2 against Dollar.

Baseline for this call is weakness in Dollar.

Dollar reached its highest point in recent years back in 2015 and the strongest momentum was before FED’s March meeting. At that time market was pricing way more than one hike in 2015 and several more in 2016. But this week’s FOMC projections show, policymakers has significantly cut back to just two hikes for 2016 and market is pricing one.

With further fireworks unlikely from ECB and FED scaling back its hike path, Dollar is likely to keep struggling against Euro.

Trade idea –

Buying at dips recommended. Euro currently trading at 1.129 area. Supports around 1.123 and 1.108 would be critical to watch out for. This outlook remains active, unless Euro clears the floor during last ECB meeting at 1.08 area.

The material has been provided by InstaForex Company - www.instaforex.com