As the EURUSD pair lingered around 1.1300 for a fourth straight week, modest gains were posted before the weekend, but no future is evident. During the Christmas period, volatility is hit hard by the vacation depression, and the decrease towards the end of the year can lead to odd pricing.
The US Federal Reserve and European Central Bank announced their monetary policy decisions last week and released new inflation and growth forecasts. As the markets waited for the release of the results, both central banks responded to the steady decline in prices, which did not result in any directional movements.
The ECB has established that it will complete its pandemic emergency program in March 2022, as expected. Furthermore, the governing council decided to increase its bond purchase program to €40 billion per month in the second quarter of 2022 and to €30 billion via PEPP in the third quarter.
Latest macroeconomic data confirmed inflation has reached an overheated level, and economic growth has slowed. The US PPI rose 9.6% year-over-year in November, while retail sales rose a modest 0.3%. Germany’s IFO business climate decreased to 94.7 in December, while the EU CPI rose 2.6% year-over-year in November.
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