Weekly outlook | FOMC and PMI data to guide markets

Important events this week:

This week will likely be driven by the interest rate decision from the Fed. The FOMC committee is expected to lower interest rates by 25 basis points. The Federal Funds Rate would then stand at 4.50%. Further data is expected from various economies with mainly PMI data to guide markets. In particular the negative economic situation in the Eurozone might hence offer insights into the bloc’s economy. Also, the rate decision by the BoE could move the market. The Pound is currently trading weak. No news is expected from the BoJ. They will also hold their interest rate decision this week. The JPY might start to resume some strength, based on long- term charts.

– CA- Consumer Price Index- Last week, the Bank of Canada had reduced their interest rate by 25 basis points as previously expected. Meanwhile the CAD had lost further momentum against other currencies. Especially the EURCAD seems interesting for now.

Based on the weekly chart above the upside momentum in the pair might continue. A break of the technical resistance zone at 1.4980 might open up room towards the 1.5139 area. Yet, should the stronger- than expected trend in consumer prices continue, the market might be seen to fall further. A break of the 50- moving average zone could then cause the recent bullish trend to be reversed. The data will be published on Tuesday, 17 December at 14:30 CET.

– US interest rate decision- The FOMC is expected to lower interest rates by 25 basis points this week. The move had been long anticipated, so Dollar weakness might be limited.

The EURUSD 4h chart shows that the recent falling trend has been broken to the upside. Especially a break of the 50- moving average trendline at about the 1.0518 area might hence open up room to the upside. Then, the market might be ready to test the 1.0580 resistance zone. On the other hand, traders might also be keen to use initial weakness of the Dollar to open up fresh long positions. The market might then resume the trend to the downside again. The interest rate decision will take place on Wednesday, 18 December at 20:00 CET.

– UK- Interest Rate Decision- opposite to the EURUSD theGBPUSD currency pair keeps losing steam. The market might be ready to break lower.

It seems that the support zone at that 1.2600 might be broken. This could hence open up room towards the next area at 1.2500. A potential wait- and- see approach by the FED could help to stabilise the Dollar, why the economic outlook in the UK still remains limited. A surprise rate- cut in the UK might also cause the Pound to weaken further. The interest rate decision will take place on Thursday, 19 December at 13:00 CET.