EUR/USD Prediction for January 20, 2017

The EUR/USD whipsawed first moving higher but then dropping following the ECB’s decision to keep rates unchanged an overlook increasing inflation expectations.  The exchange rate bounced off support near the 10-day moving average at 1.0607.  Resistance is seen near the December highs at 1.0873.  Stronger than expected U.S. data which included stronger than expected housing data and robust jobless claims failed to buoy the greenback. Momentum remains positive with the MACD printing in the black with an upward sloping trajectory which points to a higher exchange rate.

ECB left policy unchanged as expected. The central bank confirmed that asset purchases will be extended at EUR 60 billion a month from April to December and said rates will be at current or lower levels beyond the QE horizon. At the same time, QE volumes, can also be extended.