23.02.201814:46 Forex-elemzések és áttekintések: Global macro overview for 23/02/2018

The majority of the ECB's Governing Council considered that the change in communication with the market demanded by some representatives to remove the most dovish formulas (like easing bias) at the first meeting in 2018 would be premature. However, the bank maintained the state of the possibility of changing the attitude (forward guidance) at a later date as part of the regular assessment of the economic situation and maintaining stable communication with the market. With regard to the Euro currency, it was written that although , the strengthening did not have a significant negative impact on Eurozone demand so far, volatility in currency markets is a risk factor that requires monitoring. The ECB expects that basic interest rates will remain at current levels for a long time; significantly exceeding the horizon of the QE program, which is expected to last until September this year. The ECB is prepared for its increase or prolongation, if necessary.

On the other hand, there are many dovish accents in the ECB report, which the bank does not have to withdraw (and will not have to in the near future), because inflationary pressures remain low. The emerging weak impulses for CPI are the result of cyclical improvement and concern mainly food and energy prices. Domestic demand or wages do not generate base rate increases. There are, however, signs of economic downturn, which in the perspective of several quarters will have a weakening effect on CPI. The German institute Ifo said that the economic climate index in February fell more than expected (115.4 pts vs. 117.0 pts) with the subindex of expectations at the lowest level in 10 months. Still high, but also weakening subindex of the current situation indicates the passing of the peak of economic activity in Germany in the first quarter.

In conclusion, the current macroeconomic developments will likely limit the opportunities to deepen appreciation of the Euro currency in the medium term.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The bounce from the technical support at the level of 1.2257 was short lived and the market was too weak to break through the level of 1.2366 so far. This technical resistance level is the key level to the upside, otherwise, the bears will regain the control over the market and push the price towards the golden trendline support around the level of 1.2257. Any violation of this level would directly expose the technical support at the level of 1.2203 for a test.