Forex: EUR/USD: ECB’s Nowotny sees no need for easing

on Jan 14, 2014
Updated: Oct 21, 2019

**, Tuesday 14 January:**

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The EUR/USD rose today to a 12-day high of 1.3699 after Ewald Nowotny, a member of the ECB’s Governing Council, said that there is no immediate need for action by the central bank since inflation expectations remain anchored. The fact that European banks have started to repay the money from the ECB’s Long-term Refinancing Operation is a positive sign for the economy, according to the Austrian economist. Nowotny added that he does not see annual inflation dropping to zero in the Eurozone.

The hawkish comments sparked a rally of the EUR/USD past 1.3679, which is the 38.2 percent Fibonacci retracement from 1.3893 to 1.3548. The gains dissipated as the market calmed, seemingly recognising an overreaction to Nowotny’s words.
The Relative Strength Index on the hourly chart has been in a gradual uptrend since 2 January, supporting the current strength of the euro (see chart below). A run beyond the resistance at 1.37 would expose the 50 percent Fibo at 1.372.

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The French CPI for December checked in earlier today at 0.3 percent m/m, falling short of the market consensus for 0.4 percent. Consumer prices nevertheless bounced back at the end of last year, after November’s flat reading and two months of marginal deflation.

Eurozone Industrial Production for November logged a gain of 1.8 percent m/m, beating expectations for 1.6 percent. The prior month number was also higher on revision, up from -1.1 percent to -0.8 percent.
The US fundamental calendar today offers December’s Retail Sales at 13.30 UTC, followed by observations on the US economic outlook from Philadelphia Fed president Charles Plosser and his Dallas counterpart Richard Fisher, at 17.45 UTC and at 18.20 UTC respectively. Both are voting members of the Federal Open Market Committee
Right now, the EUR/USD is trading at around 1.3676, up 0.05 percent intraday.


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