The main currency pair has lost the entire daily gain and is heading into the "red" zone, as investors are nervous.
Risk aversion is the slogan of today's trading. Market participants hardly react to the statistics and do not take into account trends in the news - until the oil refreshes its minimum, the dollar will remain the favorite. The current quote in the euro/dollar is 1.0908.
In the medium-term, the instrument is exactly in the middle of the trading range of 1.0708-1.1060. There is no clearly marked tendency, and if risk aversion will remain the key market driver until the end of the week, the "bears" will rapidly deploy their forces in the major currency pairs.
Today, Mr. Nowotny from the European Central Bank, said that he sees signs of the effectiveness the ECB stimulation program. However, according to him, there are limits to the effect that can come from such an approach to the QE. Nowotny said that the regulator should continue to work to increase the volume of investments, which in itself will raise the rate of growth of the local economy. But do not count on it as a panacea for everything.
At the same time, the inflation target of 2% for the euro area is a challenge. The collapse of oil prices, which is observed in the markets right now is incredible, and it must be considered in any economic forecast.
In general, everything is correct and logical. Yesterday's statistics showed a slight recovery in the euro area inflation rate in December, up 0.2% against the forecast of growth of 0.1%. But it is a single observation, and we have seen such signs of recovery, they have not resulted in anything rational. To address the risk is very important and it is good that the ECB is aware of the limitations of fiscal instruments.
For now, the euro/dollar will continue to play on emotions. In the evening, an updated report from the US Department of Energy on oil and oil products will come out, and if it will show growth in the indicators, oil will update the minimum, and the dollar will strengthen further.
RoboForex Analytical Department
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