09.01.201810:10 Forex Analysis & Reviews: Are interventions from the ECB realistic?

The European currency continued to decline against the US dollar earlier this week, even despite the generally positive data on the euro area economy. Conversations that the ECB can resort to verbal intervention put serious pressure on the euro.

It is worth noting that in 2017 the European currency grew by almost 14%, and this was due to the sharp economic growth of the eurozone. A number of experts expressed the opinion that the European Central Bank may be dissatisfied with the sharp strengthening of the euro, as this negatively affects inflation and reduces the competitiveness of European exporters.

As far as the European regulator is concerned about this issue, it will be clear at the first meeting of the Central Bank this year. Also, important attention should be paid to the comments of ECB President Mario Draghi on this matter. If Draghi expressed concern about the high rate of the European currency, the pressure on risky assets could increase substantially, leading in the medium term to a deeper downward correction in the EUR/USD pair earlier this year.

However, counting on a serious drop in the euro is unlikely to be the right decision, and investors who are betting on the continued growth of the euro in the long term, have nothing to fear. The demand for risky assets, even under the worst scenario, will resume in the middle of spring this year, when it comes to the prospects of curtailing the quantitative easing program on the part of the ECB and raising interest rates in the euro area.

The Australian dollar continues its strengthening against the US dollar, and good data on the housing market is returning to the market of new buyers.

According to the statistics agency, the number of permits for housing construction in Australia in November 2017 increased by 11.7% compared with October and compared with the same period in 2016 the number of permits increased by 17.1%.

A slowdown was observed only in the private sector, where the number of building permits in November fell by 2.0%.

Concerning other factors, the Australian dollar also continues to strengthen against the backdrop of the current rise in commodity prices.

As for the technical picture of AUD/USD, a breakthrough in resistance at 0.7900 could provoke a new wave of growth in the Australian dollar, which will allow us to reach new highs near 0.7975 from September 25, 2017, and 0.8035.