Fundamental view:

The Euro traded downside against the greenback during the trading course of the week.  Both the Central banks – The US Federal Reserve and the European Central Bank made an announcement of their monetary policy decisions and gave fresh forecast on inflation. Market was keen on the findings; however both of them’s tapering-related measures fell short of triggering directional movements. The Fed made an increment in the reduction in bond-buying on a monthly basis to $30 billion, from $15 billion as announced in November, starting from January 2022. Which means that the central bank will stop buying  $20 billion Treasuries and $10 billion Mortgage-Backed Securities per month, and also means sooner rate hikes. Elsewhere, The Fed’s dot-plot now implies three rate hikes in 2022 and three more in 2023. Moreover, the inflation forecasts have been raised to 5.6% for 2021 and 2.6% for 2022, up from 4.2% and 2.2% previously.

On the other hand, the ECB made a confirmation that it will end the Pandemic Emergency Purchase Program on March 2022 as previously anticipated. The Government Council made a decision to expand its Assets Purchase Program to €40 billion per month in the second quarter of 2022 and to €30 billion in the third quarter of the year, to partially compensate the end of the monthly  €60 billion bond-buying through PEPP.  ECB forecast inflation increasing from 2.6% this year to 3.2% the next one. But it said price growth would then fall to hit 1.8% cent in 2023 and will be maintained at that level in 2024 while lowering growth forecast in 2022 to 4.2% from 4.6% previously.

Eurozone Industrial Production monthly report on 14^th December and US Initial Jobless Claims on 16^th December favored bullish trend whereas US PPI monthly report on 14^th December and Eurozone CPI monthly report on 15^th December favored bearish trend for the pair in this week.

The major economic events deciding the movement of the pair in the next week are Eurozone PPI monthly report at Dec 21, US GDP quarterly report, US CB Consumer Confidence Index, EIA Crude Oil Stocks Change at Dec 22, Eurozone GDP quarterly report, US Core Durable Goods Orders monthly report, US Initial Jobless Claims and Michigan Consumer Sentiment at Dec 23.

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.0.5% higher than the previous week. Maintaining high at 1.1360 and low at 1.1221 showed a movement of 139 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. Should 1.1185 proves to be unreliable support then the pair may fall further to 1.1134 and 1.1046 respectively whereas a solid breakout above 1.1324 will open a clear path upward to 1.1412 and then will further raise up to 1.1463. Chart formation of a Bearish butterfly pattern in H4 chart sets prospects for a bearish trend. Bearish harami formation in H4 chart escalates the expectation for a bearish trend.