EUR Currency Pair 2016
Euro prospects in 2016
After the ECB on 3rd of December disappointed the market, it is expected that soft monetary policy would last longer, or stimulation would be increased that can become a negative factor for the dynamics of the pair EUR/USD.
The last year EUR/USD has held within the sideway movement with the upper border at the level of 1.15 and lower border at the level of 1.05. Attempts of the pair to break the borders of this range were not successful. The pair ended the year near the level of 1.09.
First of all, it is important to understand that if the USD / EUR currency pair 2016 will go beyond the upper border, it could trigger testing of the entire range similar to the one in 2015 for Euro. That’s why after the break above the level of 1.16 it is expected a test of 1.25. If the Euro goes below 1.05 the continuation of the downtrend with a target at level of 0.9450 can be expected.
The ECB has not reached its inflation target, set at around 2%. However, its policy helps to reduce unemployment and improve the competitiveness of products from the Eurozone in external markets. The unemployment rate here last year decreased by 1% to 10.4%. Undoubtedly, this is a very high level, and it is not an indication of the strength of the currency, despite the fact that in the UK unemployment rate by the end of previous year was equal to 5.1%.
The decline in risk appetite is also a positive factor for the bulls on GBP / EUR currency pair 2016 because the Euro is the currency of funding. Soft monetary policy of the ECB has made the Euro a safe asset, so in periods of instability in the financial markets we are seeing the inflows in this currency. It is recommended to use a price decrease of EUR/GBP for the formation of long positions with the target at 0.8.
Economic data from Sweden exceeded the forecasts of experts more than the performance of any other country of the Big Ten. This should be a catalyst for correction of the SEK against the EUR in the following year.
SNB is seriously concerned that the CHF is still significantly overvalued, which is negative for the export-oriented Swiss economy. If the ECB by the end of the year will really expand the scope of its quantitative easing program, it can exert extremely high pressure on the exchange rate of the CHF / EUR currency pair 2016, which is very likely to fixate below the psychological level of 1.000.
Profit fixation on long positions in the Japanese yen contributed to the recovery of the EUR/JPY pair. As a result, there was a break of several resistance levels including 125.00 and the pair rose to the level of 125.58. Today the Euro is again under pressure due to the possibility of implementation of the stimulus measures by the European Central Bank.
Additionally, stocks are traded with a negative sentiment that is having a positive effect on the dynamics of the yen. Thus, the pair may continue to decline towards shape of 123, but it should be noted that the results of the ECB meeting may affect the situation in the JPY / EUR currency pair 2016.